BCH - Nice Corrective Pattern - Setup to go LONG & a Trade!
Updated
I already posted yesterday on this, but looking at the chart this morning I'm loving the the setup to maybe put our first trade (yes the first in a month) in addition to adding to our core. I love these kinds of setups as it provides us an opportunity to not only add to our position in a bull run (which I love), but the opportunity to add a little more with our trading funds to reduce the coin cost by adding a trade to the play. For those of you new to following me, we did this same thing a couple months ago with LTC' and it was a great trade and allowed us to add a few coins for free.
BCH's pattern is about as text book EW as it gets. Wave (II) was a wedge correction and wave (IV) appears to be an ABC correction. This is textbook. When you get a wedge correction in wave 2 you normally get a quick ABC correction in wave 4 or vice versa. This is one reason I like the setup. The second reason I like this setup is it is following the Fibb numbers almost to $1. The third reason the trend is clear UP UP UP. Now I want to put a disclaimer right here. This does not mean we cannot correct back to the initial 300ish level but I find this a low probability but something we MUST always keep in the back of our mind because overall the alt market is still in correction mode. But this appears to be the exception.
Note on the RSI chart just below wave II we bounced off the 40 level and slowly continued an upward trend peaking just above the 80 mark. Textbook 40-80 trade which Constance Brown speaks about. We then consolidated in a wedge pattern and finally broke the wedge just below the 60 level and continued to wave (III) in a nice upward strong movement. The RSI peaked again at 80 and has again fallen back down through the 60 level and is touching the 50 as we speak. Now normally I want to see 40 hit in a bull market trade, but cryptos do not play by the same numbers as stocks. They move faster so any rebound from 40-50 would signal for me that we are headed up.
Note on the stoch chart how from level II we started a nice upward movement that diverged but then converged but still continued up past 80. This is a good indicator of accumulation. We then peaked at (I) and consolidated and note the SRSI signaled with the faster moving indicator crossed the slower in a bearish fashion which then the slower sloped down and diverged meaning a correction was in play. We then bottomed around the 15 SRSI level and the faster indicator moved in a bullish manner through the slower indicator and then both diverged with a positive upslope. This is a strong movement to the upside. Again the faster quickly showed weakness meaning a top was in place and they both headed back down.
Now where to enter. I added a small position yesterday just in case we shot up faster then we thought but also to limit my risk. However all indicators are showing a bottom and we should (not must) head up from here. I am patient and will wait for the faster moving SRSI to cross the slower moving, and the RSI to turn positive and look at the price movement(looking for an uptick) This is where I will enter a full trade position and also add to my core. Yes the peanut trader is back at it! Now with a $2000+- I will have 4 coins in for trading. Let's say that is at the $600 level. With a target of around $800 that means a profit of over 30%. So I will add the one coin (profit) to my core holding and the remaining profit I will keep in my trading funds.
Now for the negative. If in the event It pulls back after the trade I will look to exit quickly. This is still a volatile market and I want to limit risk. Say 50/coin. Right now we are up 300ish a coin so $50 is not a killer and in the overall scope of things we are still in a profit! This is why I like this trade alot. Very low risk, High reward.
Good luck and keep in mind I have provided the path, its up to you to monitor your trade.
BCH's pattern is about as text book EW as it gets. Wave (II) was a wedge correction and wave (IV) appears to be an ABC correction. This is textbook. When you get a wedge correction in wave 2 you normally get a quick ABC correction in wave 4 or vice versa. This is one reason I like the setup. The second reason I like this setup is it is following the Fibb numbers almost to $1. The third reason the trend is clear UP UP UP. Now I want to put a disclaimer right here. This does not mean we cannot correct back to the initial 300ish level but I find this a low probability but something we MUST always keep in the back of our mind because overall the alt market is still in correction mode. But this appears to be the exception.
Note on the RSI chart just below wave II we bounced off the 40 level and slowly continued an upward trend peaking just above the 80 mark. Textbook 40-80 trade which Constance Brown speaks about. We then consolidated in a wedge pattern and finally broke the wedge just below the 60 level and continued to wave (III) in a nice upward strong movement. The RSI peaked again at 80 and has again fallen back down through the 60 level and is touching the 50 as we speak. Now normally I want to see 40 hit in a bull market trade, but cryptos do not play by the same numbers as stocks. They move faster so any rebound from 40-50 would signal for me that we are headed up.
Note on the stoch chart how from level II we started a nice upward movement that diverged but then converged but still continued up past 80. This is a good indicator of accumulation. We then peaked at (I) and consolidated and note the SRSI signaled with the faster moving indicator crossed the slower in a bearish fashion which then the slower sloped down and diverged meaning a correction was in play. We then bottomed around the 15 SRSI level and the faster indicator moved in a bullish manner through the slower indicator and then both diverged with a positive upslope. This is a strong movement to the upside. Again the faster quickly showed weakness meaning a top was in place and they both headed back down.
Now where to enter. I added a small position yesterday just in case we shot up faster then we thought but also to limit my risk. However all indicators are showing a bottom and we should (not must) head up from here. I am patient and will wait for the faster moving SRSI to cross the slower moving, and the RSI to turn positive and look at the price movement(looking for an uptick) This is where I will enter a full trade position and also add to my core. Yes the peanut trader is back at it! Now with a $2000+- I will have 4 coins in for trading. Let's say that is at the $600 level. With a target of around $800 that means a profit of over 30%. So I will add the one coin (profit) to my core holding and the remaining profit I will keep in my trading funds.
Now for the negative. If in the event It pulls back after the trade I will look to exit quickly. This is still a volatile market and I want to limit risk. Say 50/coin. Right now we are up 300ish a coin so $50 is not a killer and in the overall scope of things we are still in a profit! This is why I like this trade alot. Very low risk, High reward.
Good luck and keep in mind I have provided the path, its up to you to monitor your trade.
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This is where you must control the emotion GREED. We have a consolidation triangle and if we break to the downside I have a $610 level I want to see hold which may be just a simple pullback. Breaks $600 I'm out with 2.5% profit and will wait to see what happens. 2.5% in a day is a great profit!! But let's see what https://happens.https://www.tradingview.com/x/WuBcjLFn/Note
There is a huge order in at $600 on Bittrex ($140,000). That gives us some cushion. 230 coins. Most likely multiple orders.Note
Sold the trade portion @ $595 which reduces the investment portion by $17 giving a little wiggle roomNote
Money management is Key I do not want to take a loss, rather gain a little than lose a lot. A small profit is better than a small loss! Will Wait for a better setup.Note
About as ugly as it gets!!Note
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The original intent was to add to my core position here, but since it is twice as high as the original I added an equal trading position in the attempt to reduce the costs of those coins down. We added a total of 8 coins at $578. As fishj92 explained nicely, we got a throwback from the breakout as I charted below with percentages from Bulkowski's website. When you hear me speak 63% this 40% that, this is where I get my information from, so this is not me pulling a rabbit out of a hat. Now yes it is 70% chance we move higher from here I do NOT trade on patterns alone, I also take the market into account and I did not like what the market (BTC) was doing, so when ever in doubt take money off the table. So I sold 4 coins (the trade position) to give me some cushion and to see what evolved. Now we appear to be consolidating so I will look to trade the Darvos box or consolidation channel which is my favorite trade anyways. I may move up to pistachios with this next trade ;) Note
I'm back in! with a very tight stop. $610Note
This is starting to look positive. Need to get past that $615 level Note
I have been in meetings the past couple days and unfortunately TV does not allow you to provide an update to your chart, so during a break I noticed BCH had rallied back to $640 and I decided to sell the trade position that we bought originally at $578 sold at $595, bought back at $610 and sold at $640. Unfortunately I could not post this chart from my phone. Now why did I sell, well simple It was a trade I'm up $47 per coin which reduces my long term add down to $531! Who wouldn't want some BCH at $531? Secondly does anyone really know what is going to happen now the B2x is dead (allegedly) to the rest of the market. Sure we seen the rotation into alts but What IF? Now I'm not selling nor did I sell any long term holdings, but when it's unclear what is going to happen I close out trades.Third I feel strongly we are in the 4th wave in the cycle, The chart below shows two paths. Could we pull back to $536 maybe maybe not but we could definitely pull back under $600 one more time if BTC pulls back. But we could also breakout right here and head up. So If we break $650 I will trade again for $764 and add as well. So I'm leaving $10-$20 on the table for a chance at $50-$100 cheaper. I take those odds! This is why I closed the trading position only.
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Please note the length of 1 and 5 line up with wave 4 's (if it stands) 1.618 extension. Love it when things line up!Note
It does not get any more textbook than that! It looks like we have finished the first mid cycle wave count 1, and should get a pullback but it may be short lived.
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