Reading Markets Part One
I want to visit a topic that I haven’t shot videos on in at least a few years and that is market analysis and technical analysis, plus hopefully give you a great Sunday read. I shot a video recently and treated it more like a continuation of the same things I have always talked about on my youtube channel and in this community, but for those who haven’t been following along or those who have forgotten maybe its time for a refresher of some basics.
First off understand that everyone has a different viewpoint and that is because some guys are looking a big time frames, some low time frames, others are incorporating a little macro and others a lot. For example I am often seeing people bring in analysis of the DXY (dollar index) and charting that, which is smart as it often runs when Powell from the fed speaks and metals pullback. Others think that the dollar is going away and bitcoin will be reserve currency and they use things like the deficit as proof of this.
There is a million problems with all this coming across your newsfeed each and everyday and that is the data is interrupted completely different by everyone reading it. Its based on your understanding of things like supply/demand, inflation, fiat currencies, interest rates etc that give you the set of eyes that you have. While you can have 0 understanding of these things and still be amazingly successful trading techinicals, it would make sense to have at least a basic understanding of how these things work. Equally so would having a basic understanding about funding rates on crypto derivatives platforms, understanding what oversold and overbought looks like on oscillators.
In short, your eyes based on your knowledge and viewpoints of the world sees something different than I do on the chart. Understand that everyone uses different terms and words to explain things as well, further adding to confusion to those who aren’t in the crypto markets all day long. You miss when the trends change of calling it support/resistance to “liquidity pool”, who knows what the kids will call it next, who cares. Understand what it is and the terms won’t matter, understand what you are looking at, the story the market is telling you and you will be able to then make money off that with measured moves.
I want to share a storyline with you and use a few charts and assets to help explain this story with you. We will start zoomed in and then zoom out and talk about the relationship of a fractal to market behavior.
ETH on the 4hr chart, just looking at the candles what do you see? Your eyes should be immediately drawn to that area almost smack dab in the middle where there was all those candles. What is this called, does this seem important?
This is called many things, shockwave, penant pattern, price coiling, area of interest, building momentum, etc etc.
What happened afterwards? Price clearly moved up and moved up fast. So this is an area where ETH built up momentum before moving up again. Now lets add in some simple oscillators.
Look at that, we had two bear divergences that played out which helped reset the oversold/overbought in RSI, and MACD. Also look at the blue line, the hidden bullish divergence on MACD (bottom) converged with HLs on price and RSI. Then it all culminated with a breakout.
This chart is done, we do nothing and wait to see price reaction at $4k level, go from there.
Next lets bring up that 1inch chart I talked about in the video training yesterday. Why? Because this is similar structure (but much bigger, time wise and size wise on chart), price was stuck in a range that favored the upside with price action (HLs), simple oscillators and a little bit of common sense. The longer an asset stays in a range not only can you make money in that range but you can assume it will either breakout or breakdown from that range.
How many times did both ETH and 1inch tap the overhead resistance before breaking through? I talked about 3 strikes your out on the video, meaning law of 3’s, which played out on 1inch. These are all just miniature tools to use to help you gauge what is going on, what is the story and make the best decision on where its going so you can position yourself accordingly.
Now lets pivot again and zoom out to LTC, another chart I referenced in the video.
This chart is showing a variation of the strategy mentioned above, where instead of sitting below a price area for a period of time to break through, we have a 4 year old ATH that we are up against. Did you think first touch would break through? No it couldn’t even touch the old level, then second touch hit and broke through ATH (top line), only to pull back now and we are just starting to build that range/momentum underneath like you saw in ETH charts.
This LTC chart also helps understand the wall st cheat cheat or what’s called the crash cycle, which probably fell flat for many but let me help paint the picture. This is where the fractal and psychology comes in.
At what part of the cycle do you think we are at?
We have LTC, the coin that everyone knows Charlie Lee sold the top on, the coin with 0 utility, about to take out its all time highs after 4 years. We have doge, the literal definition of a meme hitting $0.70s on its way to $1. We have everyone talking about crypto and bitcoin (its trending on twitter weekly), people quitting their jobs to “go full time crypto”. What about the stock market, where Qualcomm (the literal internet bubble for 20 fckn years ago) is at ATHs again and each week the market only seems to go up. Uponly right? Ape szn right? Degen in, they keep saying, who cares it will go up eventually….
I mean what is this reminding you of? 2017 right? Ok, so again I ask… at what part of the cycle are we?
Well we past the halfway mark, my healthy guess would be the 2nd to last phase/quarter (sports reference) and realist would say we are in the final phase where majors all blow off top and the market pulls way way back. This is well into a $70k BTC, probably a $5k+ ETH and who knows for the rest. Who cares, the goal isn’t to nail tops and bottoms, its to grab most of the move and secure profits.
There is a million things that get in the way of a trader, 99.99% of it is mental. Its where you finally either copy someone else’s trade and enter or you come up with your own trade plan and enter. Agh, finally you are in the arena, playing the big game with the rest of us! Welcome! But then you jump on twitter and you see a post with the opposite bias by a big CT account, you’re long but they are saying short, then you see another, and this guy is making a great point too, sht man maybe he is right? You start to doubt, then 1hr, 3hrs, or 5hrs later without checking back in on your original trade plan, you close out trade at a loss. That is most traders, so while people could (and often do) tell you exactly what they are doing, most still won’t get rich like them.
This game takes years of looking through tape unfortunately and when this market turns, it will slaughter more pigs then ever before, the prevailing attitude and mindset of the majority in crypto is too weak, they won’t make it. This will probably trigger some, like I saying it because I want to see that or am excited about it, when infact the complete opposite is true.
Here is the video I published the other day incase you want to watch me walk through 3 examples of “strategies”. The reason I call them strategies is because if I were coding a bot, or plugging this into a Haasbot function, I would be setting them all up as separate strategies, hence the name.
$100 PRIMEXBT Weekly Giveaway
Simply go and quote retweet this with some sort of message and link your retweet in the comments section below. Will pick random winner on Wednesday.
Quick Tip: Look back on the last two contests, there was very few comments, apparently $100 free isn’t enough to get people to do simple things so your chances of winning are pretty high.
Below are links and resources that hopefully help you with your trading while supporting us.
PrimeXBT
This is a crypto & stable coin in/out platform that allows you to leverage trade crypto, major indices and currencies worldwide as well as follow successful trade ideas from other traders. So if you live in Asia, you can trade major S&P stocks and vise versa, alongside major crypto pairs.
Binance Exchange
By far still the largest exchange, if you want to trade majors and a huge selection of alts and defi, not to mention the Binance Smart Chain projects!
FTX Exchange
For non-US residents who want to trade leverage on bitcoin, alts and trade futures contracts on crypto and stocks.
QuanTower
A tool like this is valuable because its a lightweight desktop software that connects via api so even when the front end site goes down during volatility, you can still trade. This happens the most with sites like Binance and FTX. They integrate with tons of exchanges in crypto, forex and options space. Videos coming soon!
NordVPN
Need a VPN to help access exchanges or keep your data private? I have been using Nord since 2017 and have had maybe 1 or 2 issues with IP address. They are one of very few companies we turns down government attempts worldwide to “share data” and are often voted as one of the best VPNs. 2yr deal currently 68% off!
None of what I put in these emails is intended to be taken as investment advice, there is no BUY/SELL calls in these emails, nor is this any kind of signals group. There is obvious and inherent risk involved with trading cryptocurrencies or any asset, that must be taken into consideration by the investor. Any and all outcomes are your fault good/bad!
https://twitter.com/PrimeXBT/status/1372929583331340288?s=19
From KC
https://twitter.com/PrimeXBT/status/1372929583331340288?s=19