Bitcoin (BTC) Recovery Tracking. Catch It On the Bounce!

Updated

As an update to my previous post discussing the correlation between the granddaddy CEXIO:BTCUSD and altcoins. Check out the link to see my thoughts. I'm currently closed out of all my positions, holding as much fiat as I can in preparation for a bottom price. I closed out previously around 17k, bought back in at 8k and sold recently at 11k. The goal here is not to capture the gain on the very bottom and very top, but to buy and sell when we see strong indicators of where the price is headed. Capitalizing on these gains is the name of the game right now. When the price levels out, I plan on moving most of my money back into altcoins.

So, what indicators am I looking at? First off, I prefer either the 1 hour or 4-hour charts with an MA set to 90, close. A shorter timeframe triggers too many false buys/sells. A longer timeframe means that we're losing out on too much money. I'm looking for the price to cross at MA with an established trend or indication of a trend, and an RSI that is not indicating overbought (when buying) or oversold (when selling). Track this method back to the buy point in early November/late September, you'd be looking at a 475% ROI. Considering that the buy and hold strategy only returned 190% up to the last sell point at 11k, this simple wave trading strategy can be used by even the least experienced traders. My strategy was to take gains intermittently during the run-up in December and invest in small-cap coins that hadn't yet made their runs, taking profits along the way, and diversifying my portfolio. My main mistake was the breadth of my altcoin portfolio. At one time, I have over 40 different altcoins, most of them shitcoins. I failed to exit these positions as CEXIO:BTCUSD slipped and exited these positions around 12k. Lesson learned there. See my other analysis for my opinions on altcoins price influencers.

If you want a simple, easy-to-follow, proven method to earning money in the most fiat-friendly crypto, follow along! This will be my main strategy until I see money start getting pumped back into the altcoin markets. I'm posting my altcoin thoughts below.

I'd like to hear your thoughts on BTC vs. altcoins! Please comment below, as the more input we see, the more informed we are!

*** This is not a recommendation to buy or sell, this is for educational purposes only! ***

Note

The last bull run (July 2017 - December 2017)
While other coins did do well during this period, we all saw the influx of new capital into the crypto market. BTC ran up nearly 5x during this time and FOMO overtook novice investors looking to get in on the gains. I'd argue that much of the new money knew very little about the crypto space, and even fewer actually understood the technology behind BTC and altcoins.

BTC flattens out (December 2017 - mid-January 2018
The slight recovery for 20k down to 17k was much needed and did not signal the beginning of the pullback that we saw starting a month ago. In that time, I made a killing in mid-cap and small-cap coins that were underpriced compared to BTC. The behavior that we saw here was not the new novice investors, but largely smart money moving in to capitalize on altcoins. During this time, we still saw new money pouring into the crypto space. With BTC holding relatively stable, it seemed that the inflow of money into BTC balanced the flow of money from BTC to altcoins. At this point, we saw whales and smart money take profits and begin the descending channel.

BTC crashes (mid-January 2018 - early February)
Weak hands, weak hands, weak hands. This correction was absolutely needed, as the growth that we saw in BTC with the influx of new money was not sustainable. Talk to any novice that got in at 15k+, and they'd tell you that the price of BTC was cheap compared to its 50k/100k targets that they saw. These targets were not realistic in the short-term, but may be in the long-term. And as they saw their investment value fall and retrace up to 70%, they decided to cut their losses and pull out. For the new investor, losing that much money that quickly is a difficult thing to deal with. But if you buy into an overpriced market, what else do you expect?

BTC is oversold and now recovering (early February - today)
With the frenzied selling over, we saw smart money transfer that took profits early buy back in after the crash. However, the difference that we see here is that there isn't new money, or at least not as much, pouring into the market. Where does this money come from? ALTS! We're seeing nearly every altcoin lose ground to BTC as investors try and ride the recovery up.

Note

Altcoins vs BTC in the future
"Number one rule of Wall Street. Nobody... and I don't care if you're Warren Buffet or if you're Jimmy Buffet. Nobody knows if a stock is gonna go up, down, sideways or in fucking circles. Least of all, stockbrokers, right?"
- Mark Hanna (Matthew McConaughey, The Wolf of Wall Street)

If you think this part is incorrect, call it out in the comments. The trend that I see is that an upward BTC market with no new money coming in must mean that altcoins lose ground. That's the only place that capital can come from! Until we see either (1) BTC level off or (2) see a new frenzy of new money coming into the market, we will continue to see altcoins bleed.

How to profit?
My strategy is to pull my investment from every coin that I don't think is already undervalued. Until I see a trend reversal on coins, I'll hold in BTC . If we see BTC go down with altcoins going down, I'll pull into fiat. When we see BTC level off and altcoins begin to flatten and eventually move upwards, I'm going to put money into strong coins. This is a cycle, and I don't see BTC as overvalued ... yet.

Short-term BTC analysis
In order for BTC to maintain its upward channel, we need to break through 12k with strong RSI and volume. Expect a challenge here and stay focused on signs for reversal. For now, the price is below the long-term MA and it looks like we're going to break through. Stay tuned for updates as I watch this market closely.

I'd like to hear your thoughts on BTC vs. altcoins! Please comment below, as the more input we see, the more informed we are!

Note

For my short-term traders, see the longer-term upper channel with the diverging lower channel. Long-term resistance line shown in black.

Note

Adjusted downtrend channel. We're still $600 below the MA and possible parabolic tracking line.

Note

Looks like we bounced right off the parabolic line that I drew through this short-term descending channel. We did see a heavy retrace in this past hour as we failed to break our long-term MA.

Another thing that I look for is the RSI when we're approaching an intersection. Notice hour we aren't seeing the RSI hover between the middle reading and the upper overbought indicator. With a healthy ascending channel, we'd see BTC maintain these levels without a sudden drop like we just saw.

Now, I may be proven wrong over the next couple of hours with a quick upper rebound, but I doubt it. Remember, healthy MA crossovers will have a flat MA broken by a strong upper movement. This means high volume and RSI, and I'm just not seeing it now.

Note

As a follow-up, depending on how this next hour or two goes, we might see this channel hold. Falling below or breaking above will indicate a short-term reversal to trade on.

Note

We're still well below the MA. Hold tight and wait for a buy opportunity.

Note

End of day update! It looks like we're actually following the parabolic reversal line closely here. If we proceed with this behavior, we'll be looking to buy in another 12 hours or so!

Note

We've fallen to oversold on the chart here, I'm expecting a slight rebound in price here. The MA does need to level out, so I'm thinking BTC within the next couple of days will go down to at least 9k. I'll adjust this if in the short-term we see different behavior. If we do break below this parabolic trend line, we'll see lower prices. Again, I'm waiting for our price to break the 90-hour MA for a short-term buy signal. Until new money comes into the crypto space, I'm not bullish about BTC or altcoins for the next few months. I'm looking to make gains from wave movements that we've seen in the past. Backtest my method to see the types of gains I'm expecting!

Note

As predicted, we did see an upwards bounce and we're tracking the parabolic line pretty closely. I'm not yet buying in because we haven't seen the long-term moving average flatten out here, it's still sloping downward. In cases like this, we frequently see the short-term price break above the moving average, and then quickly fall below. If this happens, we'll be taking a loss as our buy signal will be higher in price than the sell signal. Additionally, I'm not seeing the volume levels that we should be seeing for a reversal, the past 24 hours or so have been pretty low volume. I'm not liking those factors, but sticking to the strategy in the long-term will lead to gains. I'll be checking back in in around 5 or 6 hours, I'll make my decision then.

Note

For a bit of visualization of the last comment (above), check out the two previous buy signals.The first buy-in is quickly followed by a sell signal. Then followed by another buy-in with an upward slope. Buying in on a downslope is riskier, as it will likely be followed by a dip. Buying on an upslope is safer (not completely safe, but safer), but you are usually sacrificing some gains for the safer play. The difference between the two points is about $500. If you're a risk-averse investor, consider the safer option. If you're willing to risk more for the potential gain, consider taking the downslope point. Also notice that an intersection on a downslope generally implies a higher RSI, implying that the price you'd buy in at is higher than if you wait for the RSI to correct itself. As always, past behavior does not guarantee future behavior in the markets, but this is true for many intersection points than we've seen with BTC.

Note

We're still following the parabolic descent line here, I've extended it to see where this line will level out. On this path, it's looking like $9,400-9,500. Checking back in in the morning, let's hold fiat and wait!

Note

Take a look at the one hour chart here, we did break through our MA with a healthy spike. Huge positive volume.

Note

Unfortunately, I slept through this break and am looking to see if I should buy in now, or wait to see if I can buy back in at a lower price. I'm looking at the 15-minute chart now. Note that the RSI did show overbought earlier, but it has come back and is no longer showing oversold. My main concern now is that we finish this hour outside of the purple channel. A dip back into the channel will tell me that I can buy in closer to the crossover point, let's call it $10,000. Activating trade because we've seen our first cross.

Buy-in: $10,000

Trade active

Buy-in: $10,000

Note

Quick update on my own trading. I'm on CEX and see more buys than I do sells for the next $500 in price either way. I'm taking this as a signal to buy in, even though I missed the lower opportunity at 10k. I case it was a stupid buy, I'm putting a strict stop loss in at $10,200, but I'm in at a flat $10,300. The strict stop loss will make sure that I don't drop all the way down to our MA if it does turn back around.

Note

Looks like we're getting a boost again here! I've set my trailing stop-loss to $10,400 to ensure that this isn't a fluke. If you bought in at 10k, we're healthily above that number now!

Note

Also, we've broken the short-term descent channel here, I'm not seeing too much volume and the RSI is showing oversold, so expect a slight dip.

Note

As predicted, we did see a drop from overbought (correction of previous comment) back down to the middle. I'm happy with the volume and the slight pullback, so lowered my trailing stop loss to 10.2k. I'm holding now, will send an update in a few hours.

Note

It's been pretty steady today, I'm glad we were able to hold! RSI is right in the middle, we're flat if not slightly upward trending today. I've drawn out a horizontal channel here. One thing to note for tomorrow/the next day...

We're approaching the long-term descent line that we need to break out of. Our last bull run was broken by this line, and I expect a challenge here again. We need volume, we need momentum, and we need to close tomorrow/the next day above the trend line significantly in order for me to be confident. If you bought in at 10k, you're sitting up 5.5%. Not a bad day in all honesty, especially compared to equity markets. I know we're all looking for these 5x, 10x, 50x gains here in the crypto space, but 5% in a day is more than you'd earn in 5 years in a savings account.

Pay attention to price movements, as it's just as easy to lose this amount of money. I've got alerts set and a stop loss in place! See you all in the morning!

Note

I might eat my words in the morning, but I'm calling that we have liftoff here. I've marked the 10k (ideal) and the 10.3k (my) buy-in lines here. As you can see, you're guaranteed some profit at the 10k line if you sell on my strategy (even if the price tanked, you'd intersect the MA line about the buy-in). We'll be challenging the long-term resistance tomorrow, let's prepare for a fight. See you all tomorrow!

Note

And again, we're seeing the same behavior of challenging the resistance line and then dropping back down. The difference here is we did not drop as hard into a downtrend, but further losses on the day may indicate that that's where we're headed. I've adjusted my stop-loss to $10,500 to lock in a bit of profit if we are going into a downtrend. If we see flat movement today, I'll remove the stop loss and trade on the death cross.

Note

We're challenging the long-term resistance line again, let's stay tuned in to see what happens!

Note

RSI is healthier than last time, volume is not as high as we should be looking for in order to break the resistance with strength.

Note

Andddd..... Houston, we have liftoff! See how we broke through with RSI within the channel and with healthy volume. We'll need to close out the next few hours about the heavy resistance line, but I'm likely how we're looking! If you bought in at 10k, congrats! You're up 10% over the past few days!

Note

And just as easily as it comes, there it goes. Showing overbought, we dropped nearly $300 in just over an hour. I've raised my stop-loss to 10.7k to lock in profits if we break through the resistance line and start reversing like we did last time. Keep an eye on these markers!

Note

Alright, we did break 10.7k briefly but did bounce back. The reason I did not sell is because the RSI looked oversold to me. Let's see how the next couple of hours go here, and I may decide to sell if we don't turn back

Note

We just can't break the long-term resistance line! What I see as potentially dangerous is that the RSI is right in the middle. We can move in either direction a significant amount. We'll need a healthy break above the line to keep up some of these gains! I'll be checking back in tomorrow morning.

Note

The downtrend line did not treat us well last night. I'd got my stop-loss at 10.5k still, but we're approaching the long-term MA anyways.

Note

Just a quick update on a trend that I see on downtrends, notice the quick drop from overbought down to oversold, with the RSI bouncing between the bottom and middle of the channel. As it recovers to the middle and the price is still declining, this gives BTC slippage while preparing for another drop. It may go back up as we saw yesterday, but I'm getting my sell orders prepped!

Note

I held tight with my stop-loss at 10.5k and did not sell. We recovered a bit, but the RSI is now showing oversold here. We've exited our downtrend channel and the resistance line was broken, once again! I've got my stop-loss in place, which may be below the MA if we turn down again overnight.

Note

Last night treated us well! Notice the MA now trending strongly upwards as it is about to surpass the long-term resistance line. If BTC were to drop down now, we'd be up over 7% from the 10k buy-in! While we haven't traded, I see this as very similar to locking in our profits here. Again, a 7% is not too shabby, and it looks like we have a ways to go before we hit our MA. Stay tuned, let's see what the markets have for us today!

Trade closed manually

I'm looking at the charts and see that we're nearing overbought on the RSI and struggling with the 11.1k level. I'm seeing the formation of an inverse head and shoulders here, giving an opportunity to trade at the neckline, buy back in later, and hold on for liftoff when the right shoulder breaks the neckline. I've exited my entire position at 11.1k, securing a 7.2% gain! If you bought in at 10k and exit now, you'll secure an 11% profit

Note

My target buy-in for the right shoulder is 10.6k, I'll be watching this closely in case we turn around quicker than expected!

Note

Let's see how this goes, but looks like my prediction was pretty close!

Note

I was off on the timing, but here's the pattern that we're still seeing. My target is around 10.8k, but we'll need to see how the next few hours treat us!

Trade active

We're tracing my H&S pretty well, so I'm back in at 11.2k! Let's see how the next couple of hours go. My stop-loss is at the 90-hour MA!

Note

Annnndddd here we go! We broke the neckline with some strength, expect some resistance because we're showing overbought!

Note

Healthy day today, but we are seeing high volume here in the past half hour. We're approaching the neckline again, but I'm holding until we hit our MA.

Note

RSI oversold! Watch for this bounce

Note

I haven't closed out my position yet because the RSI showed oversold and the MA was intersected while it was still ascending. Rarely does BTC reverse that quickly. However, we see the MA leveling out, the RSI is right in the middle, and the bars are showing the BTC is heading down again. I'm keeping an eye on it, but I'm expecting to sell tonight.

Trade closed manually

Unless we see a bullish reversal, I'll be staying out for the night. I exited this trade at 11.45k.

Note

We've closed out of the first segment of this trade, now time for the shorting and waiting to buy back in. This trade is very lengthy and is not as focused as I'd like it to be, so check out my short tracking analysis for the rest!

Bitcoin (BTC) MA Death/Golden Cross Analysis (Part 2) ---> +14%

dsgorthy

Related publications

Bitcoin (BTC) vs. All Other Coins. Macro Trend Analysis

by dsgorthy

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.