Tesla getting ready to race bitcoin againUsing candlesticks in extraordinary ways. CAVEAT: small sample size. NOT ADVICE. DYOR
Signal code: Rising Window followed by Long Lower Shadow & then Rising Window again is a buy.
Btc!
Why Bitcoin Is Directly Correlated to the Stock MarketHello Traders and Investors.
Here I would like to shine some light on why the stock market is now currently the leading indicator (here we use the SNP500) against all commodities, assets, and tradable cryptocurrencies during and post the COVID-19 Crash. Although the Bitcoin market has been showing strength, the general public has been growing eerie about the current stock market situation and all eyes are currently on the SNP500 Index. It's important to note that when Bitcoin and the SNP500 is directly compared to each other from a visual perspective, we can see a strong correlation between the two in terms of price action. We have yet to see the decoupling happen in the near future, but due to the largely correlated price action since the recent COVID-19 crash, the SNP500 has brought down the price of Bitcoin with it, and also bring it up during it's recovery - and if current price action is suggesting that we may be in a correction, we can also assume that no matter how strong Bitcoin is in terms of technicals and fundamentals, we have to play with the market as is.
This begs the question, "Where is Bitcoin headed?" We don't know; however, since we are seeing Bitcoin and the SNP500 achieving a historical correlation after the COVID19 Pandemic Crash, we can only assume that Bitcoin will also correct. There is currently a strong divide between two categories of people who trade traditional assets and cryptocurrencies:
1. Cryptocurrency Investors = Bitcoin is currently king and will outpace traditional markets, regardless of what happens - even if the stock market crashes.
2. Traditional Market Investors = We all more or less can agree that the stock market is overdue for a real correction, and Bitcoin will follow.
From our observations, we believe the current correlation during this pandemic is more than enough evidence that we have to mostly agree with category #2 - where if traditional markets correct, Bitcoin will also correct. Bitcoin has historically exhibited almost no correlation to traditional assets since the introduction back in 2009, but since the market is now assumed to be as a matured asset class after trading for 10 years on the market, we can slowly assume that there will be more consistent correlations as the timeline grows.
The SNP500 is one of the best indicators of how well America's top companies are performing and the valuation of the markets is impacted by many things, including economic trends and geopolitics. In the end, charts are nothing but lines explaining what has happened in the past, but the lines of the past three months may be suggesting to the general public as a fair warning that a correction may be in again for Bitcoin. How far? Only time will tell.
One possible explanation for the Bitcoin correlation with the stock market is the amount of people who are attempting to be risk averse as much as possible in times of hardships. For investors who have been offloading their equities, the last thing they want to do is to take their capital and buy Bitcoin again, only to lose it all. Even though interest rates are currently unenthusiastic and inflation is a risk because of quantitative easing, many have been favoring cash. This is why we want to make the point that holding cash is also not a bad thing in times of hardships.
Another theory is that the Bitcoin correlation to stocks strengthens whenever this cryptocurrency faces stubborn levels of resistance. One threshold that BTC has repeatedly struggled to smash through over the years is $10,500 – and in the second quarter of 2020, there were a number of failed attempts to crack this price zone, and now it is facing the same resistance once again. It’s also worth keeping in mind that this results in a much directly correlated market between crypto and the stock market. A massive increase or decrease in Bitcoin prices tends to have an effect on hundreds of other alt coins.
Many crypto analysts (category #1, as stated above) are hoping for an “uncoupling” that breaks the correlation between Bitcoin and the stock market – meaning that the cryptocurrency treads an independent path and isn’t swayed by macroeconomic factors such as interest rates, inflation and unemployment.
Although there have been some similarities in the past few months, the evidence of Bitcoin correlations to the stock market is far from conclusive - this write up is only an observation and not a conclusive test result. Prior to the coronavirus pandemic, when investors were being spooked by the looming threat of a US-China trade war, some developments that suggested tensions between Washington and Beijing were worsening actually appeared to help Bitcoin surge. As we can see, this is a perfect example of why we may not currently understand the real historical correlation we are having with Bitcoin at the moment.
This leads up to our next point - Diversification.
There’s a reason why Bitcoin correlations matter: diversification. Pro investors often try to invest in a multitude of equities and financial instruments that aren’t influenced by the same factors, helping to mitigate losses in the event of a downturn, also known as hedging the market. If crypto and the stock markets rise and fall in tandem with one another, this could create unwelcome exposure for a poorly balanced portfolio. But with Bitcoin currently facing similarities to the US stock market, Bitcoin for the past few months can be considered by many a lucky draw since it recovered similarly to the SNP500.
When it comes to Bitcoin and the stock market, some experts also believe that the correlation will inevitably increase in the years to come. We believe this will happen as well as previously stated above, the market has been trading for almost a decade and is now known to the general public. The cryptocurrency market is doing its best to keep its clear distinction as a unique asset class by offering new forms of phases in technology (ICO phase, DEFI phase, and so forth). It’s a well known fact that institutional investors are intrigued by Bitcoin – and through the rollout of derivatives such as futures and options from 2018, it is becoming increasingly possible for people to acquire cryptocurrencies for the first time. Some experts believe that maturity in the crypto markets will only serve to strengthen the bond with stocks.
As a final conclusion, we would like to conclude on one question: Will the stock market crash?
Assuming that there is a Bitcoin correlation with stocks, here’s the main piece of advice I would love to give to our users: Gaining intelligence about any stock correlation can help you make your decision about positioning in the market. Bitcoin has been one of the best introductions to mankind since sliced bread.
Some analysts fear that a bubble is about to burst – especially in indices such as the Nasdaq 100, which has recovered all its losses and actually reached a new record high even as COVID-19 cases in the US continue to rise with anger. The uncomfortable question now is if, and when, such a crash would occur. It could be weeks. It could be months, even years.
Correlations with the stock market come and go, but COVID-19 remains a massive unknown that could affect Bitcoin just as much as the S&P 500. BTC has been trading within an incredibly odd trading range, meaning it’s rapidly becoming a spring that is coiled up and ready to burst any moment. Irrespective of whether it moves upwards or downwards, the jump is set to be a big one.
Trade Safe.
X Force
Where will the trend end? TD Trend Factor and TD PropulsionBITFINEX:BTCUSD
Dear friends!
I continue describing Thomas DeMark’s technical tools. I have already explained such tools as:
1. TD Retracements
2. TD Lines of demand and supply
3. TD D-Wave
4. TD Sequential and TD Combo
Today, I am going to deal with TD Trend Factor and TD Propulsion. These are two independent technical tools that in combination help you quite accurately identify the trend reversal moment and potential targets. But first, I’d like to unveil a small secret of DeMark. Following long experiments with Fibonacci numbers, DeMark found out the two most important of them. These are 0.382 and 0.618. By subtracting one from the other and dividing the result by 4, he found the value of 0.059.
Later, for many years using this number in practice to calculate levels of support and resistance, he came to the conclusion that the most frequent ratio that occurs in trading is 0.0556. Therefore, when calculating the resistance levels, an upward percentage of 0.0556 * 100% = 5.56% is used. When calculating the support levels, a downward percentage of 100% - 5.56% = 94.44% is used to analyze micro-movements or prices whose count goes more than two digits after the decimal point, DeMark suggests using a coefficient with a shifted decimal point, i.e. 0.556% and 99.444%, respectively.
TD Trend Factor basically aims at identifying the trend reversal level and confirming its relevance. To do this, we first need to find out the reference point.
For a bearish trend, it is determined by the following conditions:
1. Identify the bar that marks the peak of the bullish trend
2. If the high bar above the previous bar, the starting point is at this bar’s high
3. If the high bar closes below the previous bar, the reference level is the closing price of the bar with the peak.
To explain it better, I’ll give an example:
The above chart presents Bitcoin all-time high. Its peak is at 19891 USD. You see that this bar’s close is lower than the previous bar’s close, so, the reference level is the high bar’s close.
This level is at 18960 USD. So, based on this level, we shall build the levels of TD Trend Factor for a bearish trend. The simplest way is to calculate them in Excel.
Therefore, I’ve got the following calculations:
18960*94.44% = 17905
17905*94.44% = 16910
16910*94.44% = 15970
You can be calculating in this way until the result is close to 0. With rounding to integers, there are the following levels
18 960
17 906
16 910
15 970
15 082
14 244
13 452
12 704
11 997
11 330
10 700
10 105
9 544
9 013
8 512
8 039
7 592
7 170
6 771
6 394
6 039
5 703
5 386
5 087
4 804
4 537
4 284
4 046
3 821
3 609
3 408
3 219
3 040
2 871
2 711
Eventually, as the history has proven, the low of the bearish trend came at 3215.2 USD, that is just a few dollars below one of the levels indicated above.
You might say that this is a coincidence but try to carry out this experiment on other trends and you will see that it works.
If we analyze the earlier history BTCUSD price chart, we’ll see that the TD Trend Factor levels of the downtrend had excellently worked out before that (see the chart above). In addition, it is clear that the lower the price is moving, the thicker becomes the grid. This construction fully matches to the market behavior; in a bearish correction, the deeper the price falls, the stronger the resistance becomes and the shorter is the range of price swings.
For a bullish trend, the same rules are applied, only in vice versa. .
To find a reference levels, we need identify the bar that marks the low of the bearish trend and:
1. If the low bar closes below the previous close, the reference level is at the low.
2. If the low bar closes higher than the previous close, the reference level is the low bar’s close.
I’ll explain on the example.
The above chart represents the low at 3215.2 USD that we have already marked before.
If we zoom it in, we’ll see that the close is a little higher than the previous bar’s close, so the reference level will be set based on condition 2, at 3283.4 USD.
The levels will be calculated in the same way, only the coefficient will be 105.56% instead of 94.44%.
Finally, there are following levels:
3 283
3 466
3 659
3 862
4 077
4 303
4 543
4 795
5 062
5 343
5 641
5 954
6 285
6 635
7 004
7 393
7 804
8 238
8 696
9 179
9 690
10 228
10 797
11 397
12 031
12 700
13 406
14 152
14 938
15 769
16 646
17 571
It makes no sense to mark all the levels in the chart, but to estimate the relevance of the calculated levels, I’ll mark the closest ones to the recent price movements.
As you see from the above chart, the calculated zones serve not only as strong resistance levels, but as a support as well.
How to use TD Trend Factor
TD Trend Factor is a supplementary tool, used to confirm signals, it doesn’t provide any buy or sell signals by itself. So, you need to use it together with other DeMark's tools:
TD Retracements
TD Lines of demand and supply
TD D-Wave
TD Sequential and TD Combo
And other DeMark's indicators that I haven’t yet described.
One of these tools is TD Propulsion.
The indicator is designed to send signals of the trend extension or exhaustion. This tool consists of two parts. The first element is TD Propulsion Up and TD Propulsion Down,these indicate entry points. The second part is TD Propulsion Up Target and TD Propulsion. As you can guess by the name, these are trend targets. So, let us see how this indicator is built and how it can be employed in practice.
Thomas DeMark says that to confirm a bullish trend, we need to do the following:
1. Identify the points of X and Y – the low and the high of last growth wave in they bullish trend.
2. Identify the Z point – the lowest level of the bearish correction, following the growth wave XY.
If this level is lower than 23.2% of the correction size, than the points of X and Y are correct; if this is not so, one needs to rearrange the borders of the wave.
Next, we shall identify the TD Propulsion Up level
To do it, we use a simple formula:
A = Z+(Y-X)*0.236, , so, in the given example, this is:
A = 12730.6 + (17171 - 5400.2)* 0.236 = 15508.5 USD.
This level marks the first resistance level in the trend continuation. As a rule, this level is not broken out when the trend reverses. Next, we shall find out the level of TD Propulsion Up Target.
To do it, we use a simple formula:
A = Z+(Y-X)*0.472, so, in the given example, this is:
A = 12730.6 + (17171 - 5400.2)* 0.472 = 18286.4 USD.
This level is potential buy zone. As you see from the chart above, this level is very close to the real one and the trend reversed only after just a little more than a thousand of dollars,
I will describe this situation in more detail a little later. Now, I’d like to explain how to analyze a bearish trend with TD Propulsion.
Here, you build everything in a similar way, just like when using other DeMark's tools. For the further analysis, I found out clear borders of the downward wave. They are marked with the points of X and Y in the above figure.
Now, let us look at the start of the bullish correction and the level where it finishes. This is point Z in the chart. You see that this level exceeds the level of 23.2% of the correction, and so, the wave itself and point Z are suitable to calculate the TD Propulsion Down.
To do this, I use the following formula:
A = Z-(X-Y)*0.236, so, in the given example, this is:
A = 4384- (6485.8-3215.2)* 0.236 = 3612.14 USD. This level is TD Propulsion Down.
Next, I identify D Propulsion Down Target.
The formula is:
A = Z-(X-Y)*0.472, so, the there is the following result:
A = 4384- (6485.8-3215.2)*0.472 = 2840.27 USD.
As you see from the above chart, the A level has worked out. As I’ve already written above, this level may signal either the trend continuation or its reversal. And the way how the price goes through this level, very difficult and slowly, is the trend reversal sign. In addition, I should note that both in the first case, when we identified the bullish trend reversal, and in this situation, level A works out. Therefore, it can be applied as a low-risk trading strategy to set the intermediate targets when analyzing the Bitcoin future price movements. To see the full capacity of these tools, we need to study their application together with other DeMark's tools on a real example.
As an example, I will analyze the moment when the trend was reversing at 3215.2 USD. It is clear from the above chart that TD Propulsion Down A level exactly matches to the TD Trend Factor level at 3612.1 USD. When, following the Z point, the BTC price was moving down, it is clear that this level provides a strong support. In addition, the TD Trend Factor level at 3466 USD is not broken out. The price rebounds from it like a rubber ball.
A buy signal here is the bullish Setup (remember TD Sequential and TD Combo). This signal is marked with a red arrow in the above chart. It is confirmed by a typical rebound from the TD Trend Factor level at 3466 USD and the bar closing above level A. After this combination, one could have already entered a long with a short stop beyond level 3466 USD.
You already know what happened next. The risk/profit ratio for such a trade is perfect. Now, for a fair experiment, let us try to find out an entry point in the current market. First, let us build the TD Trend Factor support and resistance levels.
There is already a clear high with the peak at 13764 USD. We see that this high bar closes above the previous bar’s close. So, the reference level will be at the highest high of 13764 USD. Next, we multiply each level and the product of each multiplication by *94.44%.
There are the following values:
12 999
12 276
11 593
10 949
10 340
9 765
9 222
8 709
8 225
7 768
7 336
6 928
6 543
6 179
In the above chart, I marked these levels and I have noted that the last bar closes above the previous bar’s close; and its low at 9728.2 is close to the TD Trend Factor level at 9765, which itself is a bullish signal. For the Bitcoin price prediction, based on this signal, I may already assume a reversal and point Z to calculate the levels of TD Propulsion.
It is clear from the above chart that the Z point is a little lower than the level of 23.2% of the correction from the wave XY with the coordinates on the price scale of 3405.3 and 13764. Therefore, the Z point is relevant for this wave. So, we can calculate TD Propulsion Up (A) and TD Propulsion Up Target (B), according to the coordinates and the formula studied above:
A = 9728.2 + (13764 – 3405.3) * 0.236 = 12172.85 USD.
A = 9728.2 + (13764 – 3405.3) * 0.472 = 14617.51 USD.
Next, I attach the TD Sequential indicator and select the timeframe where setups are worked out most accurately on the historical data. For the BTCUSD pair, the indicator performs the best in the five-day timeframe.
As a result, you see that the BTCUSD is now in a bullish setup, where the fifth bar is formingg, out of nine in total. It means that before a the bitcoin trend could reverse and a bearish trend should starts, there at least four bar more to be formed in the bullish trend, not counting the currently forming bar, that is, there are more then four weeks ahead. In addition, there is a strong support level at the Z level at 9728 USD, below which, one might set stop losses, and the first target for ta take profit is at 12172.85 USD, the second target profit is at about 14617 USD.
Besides, I can define the possible BTCUSD scenarios and suggest an adequate response to a particular market situation.
The chart above outlines three possible scenarios for the BTC future trend.
1. The first scenario, a pessimistic one suggests that the BTC ticker shouldn’t break through the A level and rebounds downside. This is a clear trend reversal sign. We should take the profits and enter short trades with a stop above the A level.
2. The second scenario is neutral. According to it, the ticker should break through the A level and stop close to the B level. In this case, we will take the profit at the B level and expect either the reversal below the A level to enter shorts, or reaching the B level to enter new longs.
3. The third scenario is the most optimistic and the least possible, in my opinion. The ticker breaks through the levels of A and B with large volumes and without strong delays. In this case, we should just follow the trend, moving the stops, covering the TD Trend Factor levels, calculated before, based in the low of the bearish trend.
Here, I am about to finish describing Thomas DeMark's tools, TD Trend Factor and TD Propulsion, but I am not finishing writing about his studies. In my next training article, I will deal with more unique tools by the famous trader and explain how to apply DeMark's indicators to cryptocurrency trading.
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I wish you good luck and good profits!
How to filter good and bad entry signals? TD REI and TD POQBITFINEX:BTCUSD
Dear friends!
I continue describing Thomas DeMark’s technical tools.
Today, I am going to deal with more DeMark’s technical tools, TD REI and TD POQ that are included in the group of indicators TD Oscillators.
Major problem of all oscillators
The main problem that DeMark sees in the use of oscillators is that average traders exaggerate the value of the divergence of the indicator with the price position.
As a rule, people, who do not understand how an indicator works and based on what principle it alternates, do not care what the composition and the recommended interpretation of this indicator might be. They try to interpret its vague signals that aren’t basically signals and must be confirmed by other indicators. A good example is a famous indicator, RSI.
In May, this indicator showed a bearish divergence in the daily timeframe (see the chart above) and, according to all rules, the trend should have reversed, and the price should have started declining. According to DeMark, the main problem in interpreting such signals is that users do not take into account the time that the indicator is in the overbought and oversold stages. DeMark notes that if the indicator is in the overbought or oversold zone for more than 6 bars, this indicates the strength of the trend, which means that this signal is false.
It is clear from the above chart that the two overbought zones lasted for more than 6 bars, which indicates the trend’s strength, and so, the oscillator’s correction in these cases will be a false sell entry signal.
The number of bars may be different for other oscillators. Everything depends on the indicator’s parameters and the peculiarities of its composition. Therefore, in each particular case for each timeframe, one should perform an own analysis of the number of bars in the overbought or oversold zones.
To facilitate the analysis of all these parameters, DeMark developed his own series of oscillators that will described below.
Introduction to TD REI indicator
First, I’d like to write about TD REI, or Range Expansion Index. This indicator is designed to filter out false signals when the price is trading in the range or in a strong trend, it should send a reversal signal only if the market sentiment really changes.
Before I present the charts with this indicator, I want to pay tribute to its developer @ e2E4mfck. The matter is that the TD indicators are not available in the Tradingview standard library, therefore, I had to look for those that were published in the public library and only thanks to such enthusiastic programmers can you get acquainted with these wonderful tools by DeMark.
So, you see the TD REI indicator in the chart above, at its bottom. The TD REI oscillator typically produces values of -100 to +100 with 45 or higher indicating overbought conditions and -45 or lower indicating oversold. Besides, the TD REI counts the number of bars, and, if the price is in the overbought or oversold area for more than 6 bars, the indicator shows this and indicates a strong trend.
On the other hand, this indicator is more responsive to the price changes, and, while the RSI is still in the overbought area, or in the neutral area, the TD REI has already a few times entered the oversold area, thus sending a buy signal (in the above chart, all buy signals on the indicator are marked by circles, and by green flags on the price chart.
It stands to reason that this indicator is much more complicated than it may seem, based on the above example. It also has many peculiarities, which I will describe later.
First, I’d like to describe its mathematical model, so that you can understand the indicator’s signals.
Mathematical model of TD REI indicator
The TD REI value is calculated by adding the respective differences between the current day’s high and the high two days earlier and the current day’s low and the low two days earlier.
To make it clearer, the calculation formula looks like this:
X = (H – H2) + (L – L2), where
H is the current high
H2 is the high two days earlier
L is the current low
L2 is the low two days earlier.
Besides, two conditions must be met:
Condition 1
• the current day’s high must be greater than or equal to the low five or six days ago,
or
• the high two days earlier must be greater than or equal to the close seven or eight days ago.
Condition 2
• the current day’s low must be less than or equal to the high five or six days ago
or
• the low two days earlier must be less than or equal to the close seven or eight days ago.
If neither of the conditions is met, a zero value is assigned to that day’s bar.
If both conditions are met, then there will be a different formula:
TD REI = (Y / (H5 - L5)) x 100
Where:
Y = (Sum X1 next… X5)
H5 is the high over a five-day period
L5 is the low over a five-day period
Differently put, TD REI a kind of shows the price movement, adjusted to a trading range over the five days.
TD REI filter for signals
Like any other indicator, TD REI is not a Grail and sends false signals too. To filter out these false signals, Thomas DeMark suggests using the TD POQ indicator, (Price Oscillator Qualifier).
To be fair, I must note that this indicator can be used together with any oscillator, based on the price action, (for example, MACD, RSI).
TD POQ conditions to validate the TD REI signals:
Buy signal:
1. TD REI has been in the oversold condition (below -40) for six or more bars;
2. The last complete bar should close below than the previous bar
3. The current bar’s open should be equal or lower than the highs of the previous two bars;
4. The market should be trading above the open price and break through the high iver the last two days.
Sell signal:
1. TD POQ has stayed in the overbought condition (above + 40) for six or more bars;
2. The last complete bar should close higher than the previous bar’s close
3. The current bar’s open should be equal or higher than the low for over the last two days
4. The market should be trading lower than the opening price and break through the low of the last two bars.
To explain how you can use the TD POQ to filter the entries, I’ll describe the examples of a buy and a sell signal.
Buy signal:
1. It is clear from the chart above that the first condition is satisfied, the price has been in the oversold area for more than 6 bars.
2. The last complete bar closed lower than the previous bar’s close (green dots below the red ones in the chart)
3. The current bar opens lower than the highs of the two previous bars (the current opening price is the same as previous bar’s close, it is market with green dots; and it is lower then the two yellow dotted lines)
4. When the price breaks through the highs of of the last two bars, there is a buy signal (it is marked with the red cross).
As you see from the chart, there is a reliable early signal to enter a trade.
I must note that the TD REI is a good supplementary tool for other Thomas DeMark's indicators. It is clear from the above chart that the signal perfectly matches to the start of a bullish set, indicated by TD Sequential (the developer is @andyhitchman) on the five-day timeframe (but it also matches on the shorter timeframes).
Sell signals
Now, let us analyze the sell signal on the example of the BTCUSD all-time high.
First, I’d like to note that the TD REI indicator, starting from 8000 USD recorded on November 20th, 2017 (in the BTCUSD price chart) was in the overbought condition for more than 30 bars and has never sent a false sell signal! In my opinion this fact alone is the evidence of the TD REI efficiency.
Now, let us analyze the sell signal produced on December 19th.
1. As I’ve already said that the indicator had been in the overbought zone for than 6 bars before the signal emerged. We can put a check.
2. The last candlestick closed as a doji, the closing price is almost equal to the previous bar’s close. This condition is NOT fully met, so we need an additional confirming signal.
3. In the above chart, you see that the current bar, of December 19th, opens lower than the high of the previous two days, so, we also put a check.
4. The market broke through the lows of the previous two bars and is trading lower (I marked the breakout with the red cross).
Therefore, as there is not a fully confirmed signal, it is important to employ this indicator with other Thomas DeMark’s tools.
For example, in the previous article (see here), I described a good tool, TD Propulsion.
In that article, we defined the TD Propulsion Up Target level for the bullish trend at level 18286.4 USD.
If we attach it to the present chart and add the calculations of the TD Sequential indicator, we shall see that this very bar closes lower than the TD Propulsion Up Target level, and at the same level, a bearish set up starts, based on the TD Countdown indicator.
Both these signals are confirming signals and, finally, suggest sell trades.
Analysis of the BTCUSD current market situation
Now, let us analyze the current BTCUSD price trend. In the previous article, when I was writing about the TD Trend Factor and TD Propulsion indicators, I finally outlined three possible scenarios for bitcoin trading.
At that time, it was difficult to determine the BTCUSD future trend.
Remember, there were three scenarios:
1. BTC price should rebound from level 12172.9 USD and go down
2. The price should rebound from level 14202.4 USD and be trading flat with a possible decline in future
3. The BTCUSD should continue moving up.
Now, if I apply the TD REI with the TD POQ filter to this chart, the situation becomes clearer.
As you see from the above chart, the last TD REI signal satisfies all the four conditions of the TD POQ filter (the overbought condition continues longer than six bars, the last bar’s close is higher than the previous bar’s close, the current bar’s open is higher than the lows of the two previous bars and the lows of those bars have been broken through).
In addition, as the fourth condition suggests, the market was trading lower than the reversal bar’s open (blue dots). Therefore, the first scenario, a more pessimistic one, becomes more likely. As I wrote in the previous article, the BTCUSD price is likely to hit the TD Propulsion Up level (level A). In fact, the market has already worked out this target so far, having not reached just a few dollars. Considering the bullish set up on the five-day timeframe, according to the TD Countdown, the btcusd may be trading flat for some more time. The BTCUSD may even try to hit level again 12172.9 USD, but, in general, it is not enough to invest your entire deposit into entering a buy trade.
As experience proves, the combination of TD REI signal and the TD POQ is a strong signal and I don’t recommend ignoring it. The BTC price is likely to rebound and continue its downward correction, according to the pessimistic scenario. After all, it doesn’t suggest that the bullish trend will necessarily end. However, my overview of the TD REI indicator won’t be complete if I don’t describe a situation, when the TD POQ filter doesn’t work.
The above chart represents such an example. You see that the TD REI has been in the overbought area for a long time, however the reversal bar (marked with the red arrow) doesn’t satisfy the last condition, the bar doesn’t break through the lows of the previous two bars. It is clear from the above chart, that the price hasn’t reached the level, marked with blue dots.
It suggests that the sell signal is false, and so, when the indicator reaches the oversold area, one might use this opportunity and enter a new buy trade, to increase the bullish position (I marked the buy zone with a green flag in the chart).
In case of a bearish trend and an unconfirmed buy signal, one may act in a similar way. However, you must always bear in mind that it is better to employ DeMark’s tools together. Only when all the indicators send the same signal, you can avoid trading mistakes and safely put entries.
I am not finishing writing about Thomas DeMark's oscillators. In my next educational posts, I am going to describe such indicators as:
TD DeMarker,
TD Pressure,
TD Range expansion Index,
TD Rate of Change.
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I wish you good luck and good profits!
Mikhail @Hyipov
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Elliott Wave Analysis For BTCUSDBTCUSD is coming higher, now very close to former swing low at 11150 so bearish impulse can be invalidated soon. That is why we adjusted the wave count, and are now looking for wave X rally, but still same bias; recovery is in three waves so bears are possible but only confirmed when trendline support of current upward channel is broken. If on the other hand, coin will continue to rise and break the trendline resistance with an impulsive recovery away from the low, then we will turn bullish again and look back towards August high.
It this development the most important is close observation of current bounce that should be key to identify whats next for BTC.
Answering your questions...1. What is the mirror level?
To answer this question, we should remember the general meaning of support and resistance. Support represents the situation in which the price constantly goes down, then reaches a certain price point, and ceases to decline. Resistance shows just the opposite situation: the price constantly rises, then reaches a certain price level and, suddenly, ceases to rise.
2. What is the Historical Level?
If the price dropped dramatically and after some time approaching that level again we have a huge possibility for the repeat. It can be a all-time high or all-time low. It doesn't matter. I see a price reaction near such levels almost every time when the pair approach it.
3. What is False breakout?
False-breakouts are exactly what they sound like: a breakout that failed to continue beyond a level, resulting in a ‘false’ breakout of that level. A false-break of a level can be thought of as a ‘deception’ by the market because it looks like price will breakout but then it quickly reverses, deceiving all those who took the ‘bait’ of the breakout. It’s often the case that amateurs will enter what looks like an ‘obvious’ breakout and then the professionals will push the market back the other way false breakout is essentially a ‘contrarian’ move in the market that ‘flushes’ out those traders who may have entered on emotion, rather than logic and forward thinking.
4. What is squeezing?
When a large number of traders are forced out of their positions due to sudden rising or falling prices, it is known as a market squeeze. Some high-volume markets are more susceptible to squeezes than others, but the general assumption is that it can happen in any market at any time.
Market squeezes can be either long or short. In this example, we’ll look at long squeez.
Intermarket Bitcoin - Breakthrough or Failure?Intermarket Analysis is great for finding out if there is going to be a trend change or a trend reversal. Today we will look at multiple intermarket relationships that BTC is interacting with to try and decide if we are going to break the downtrend, or retest the sloping resistance and fail. So let’s first start with BTC.
Here you can see that we are coming up on the resistance in the RSI already, and we should see either a failure or a breakthrough in the coming days. We will then be monitoring the sloping price trend line and see what happens there. We could stop here, or we could see if there are any other trend line ratios that could give us hints towards the question - breakthrough or failure. The goal of the exercise is to use a weight of the evidence approach. If BTC breaks through in more ratios than it fails in, we will assume a trend change from bearish back to bullish.
Here is what we will look at:
1. BTCUSD/SPX500USD
2. BTCUSD/COPPER
3. BTCUSD/VIX
4. BTCUSD/BTC.D
These will all be added in the comments with the final total being updated as we have more price data.
Happy Trading!
SPX needs Bitcoin/Crypto to go parabolic more than SPX to......SPX needs Bitcoin/Crypto to go parabolic more than SPX to break out of ATH. CAVEAT - small sample size. NOT ADVICE DYOR.
Used Blue Verticals From Analysis Of SPX Below
Max healthy pullback in this analysis <7% from ATH . Max danger if market drops >9.89%. NOT ADVICE DYOR
Construction Details:-
All verticals where Histogram >0 but trending down i.e. light green. All horizontals are previous highs before histogram started trending down. Blue vertical indicates where price subsequently broke through two horizontal supports. Green diagonals oddly both equal roughly same percentage rise.
Understanding Risk/Reward through Bitcoin's CME Futures GapsIf you like this analysis, please make sure to like the post!
I would also appreciate it if you could leave a comment below with some original insight.
In this post, I will be explaining the concept of the Risk/Reward Ratio, also known as the RRR, and the significance of this idea when it comes to trading.
I will also be explaining how this can be applied to Bitcoin's CME Futures Chart on the daily, in regards to gaps.
Analysis
- To begin with, Bitcoin's CME Futures chart shows a huge gap leading down to 9.6k
- Unfortunately, this gap is yet to be filled.
- Given that 99% of gaps that have been created get filled some time in the future, it's likely that this gap will fill as well
- However, solely approaching the chart from the perspective of gaps has its limitations
- For instance, the gap at 11.4k took almost a year to fill.
- As such, gaps don't provide us with a specified time frame as a reference
- Should we fill the gap right now, and bounce at gap support, that would be a 7% move downwards from the current price
- Should we see a stronger bearish price movement that extends below the price gap, we could see a 15% move downwards based on support levels
- The gap support at 8.8k converges with the descending trend line support on the weekly, as well as the 0.5 Fibonacci retracement support (refer to our previous analysis)
- As such, it's reasonable to conclude that a bearish price movement over 15% is less probable.
- On the bright side, it's also important to note that there are some gaps above the current price, indicating potentiality for bullishness
- There is a wide gap at 10.5k levels, and another one at 11.4k
- Given this information, we can estimate our risk/reward when entering a position at current levels
- Splitting our entries into three different levels, we can:
1. Enter at the current price of 10.2k
2. Dollar Cost Average (DCA) at the 0.382 Fibonacci retracement support at 9.4k
3. Enter at gap support around 8.8k
- This way, we know that our risk is limited, and that the upside remains huge, due to the overall trend being bullish.
- Based on significant support and resistance levels, a trader would then calculate his stop loss target and take profit targets according to his risk appetite.
Conclusion
The trend is your friend. While the short term trend may appear bullish, it could be said that the overall trend for the long term remains bullish. As such, it would be better to look for spot/long entries near support.
Don't predict the market. Take it by levels, and play by probabilities.
- Michael Wang-
13 Recommendations for Traders1. You should not expect that the loss-making trades will ultimately lead to a reversal and profit. You should not build up a position on it, proving to yourself that you are right. The best solution would be to exit the position and accept your losses, as they are inevitable in stock trading.
2. Stop loss and take profit should be based on the market situation, not financial opportunities. If you need to set a stop longer than your deposit allows, the trade should be canceled.
3. Entry and exit points should be objectively justified.
4. Do not enter the market during the high volatility period - the pursuit of the large profits does not always end as a trader would like to.
5. Not all bear market strategies are bullish.
6. A canceled buy signal may be a sell signal as well as vice versa.
7. It is always easier to lose money than to make money on trading.
8. If the response to the news does not instantaneously appear on the market, perhaps it will follow in the future and will have more serious consequences.
9. To increase the likelihood of a successful trade, it is necessary to enter it with a little delay and exit it without waiting for the change in the profitable movement.
10. When a crowd enters into a trade it is time to exit.
11. If you have a feeling of anxiety you should close the trade and continue trading keeping a cool head.
12. Success is a prosperous series, not a single trade.
13. If the series of losing trades are going on, it is worth to take a break. This will allow you to gather your thoughts and, possibly, turn the tide.
Best regards EXCAVO
Bitcoin $18,000/$24,000 or $28,000/$38,000. See the stats.Rule 1 = 3 green Mac's rising Rule 2 = Rule 1 trend broken (green vertical) Rule 3 = Rule 2 followed red Mac. Statistic since Jul 2015 every closing week break out from the high of Rule 2 resulted in a near 50% to 100% increase in price. Therefore, break out from $12,065 could hit $18,000 or $24,000. Then once weeks closing price price breaks $19,175 could hit $28,000 or $38,000. KEY (3 green MAC's = MACD source code HI, CL, LO) CAVEAT - very small sample size. NOT ADVICE. DYOR.
DRAG CHART ABOVE TO THE RIGHT TO SEE CLOSE UP
The difference - Double Top & Head and ShouldersHello my friend | Welcome Back.
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What Is Double Top and Bottom?
Double top and bottom patterns are chart patterns that occur when the underlying investment moves in a similar pattern to the letter "W" (double bottom) or "M" (double top). Double top and bottom analysis is used in technical analysis to explain movements in a security or other investment, and can be used as part of a trading strategy to exploit recurring patterns.
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What Is a Head And Shoulders Pattern?
A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal. The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.
Risk management in trading €$¥Hello my friend | Welcome Back.
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What is market risk?
Market risk is the capacity for your trades to result in losses due to unfavourable price movements that affect the market as a whole. There are several factors that can cause market risk, but movement in any of the following can exert major pressure:
Stock prices
Interest rates
Foreign exchange rates
Commodity prices
What is liquidity risk?
Liquidity risk is the possibility that you may be forced to trade an asset at a worse price than you anticipated. For example, when trying to sell an illiquid stock you may struggle to find a buyer, meaning that you have to sell your stock for less than its current market value.
In some markets, liquidity risk can even mean that your trade negatively affects the price of the asset you are buying or selling. This is generally more of an issue in emerging or low-volume markets, where there may not be enough people in the market to trade with.
How to manage your risk
Risk management is the process of identifying, analysing and reducing risk in your trading decisions. Usually, it involves developing a trading plan that helps you decide what to trade, when to trade and where to place your stop losses. Here are three tips on how to manage risk:
1. Assess risk vs return
In general, trading strategies focus on weighing up a trade’s potential risk against its potential return. If a trade has greater risk, it should carry the chance of a greater return to make that risk worthwhile.
For example, government bonds are considered a safe, low-risk investment – but when compared to corporate bonds, they offer lower rates of return. This is because the risk of investing in a corporate bond is higher, so to compensate for the added risk investors are offered a higher rate of return.
2. Understand each market’s risks
It’s important to ensure you understand the factors that influence different markets, so you can base your dealing strategies on relevant information. Improve your success rate by learning more about the markets you’re dealing on and exploring new strategies.
Our trading skills section is a great place to learn about all the markets we offer.
3. Keep learning
Learning to trade successfully while managing your risk is a continual process – and one of the best ways of ensuring that you are always improving is by starting a trading diary. By keeping track of which trades and strategies have worked in the past, you can build on your successes and learn from your failures.
Ascending Channel & Descending ChannelHello my friend | Welcome Back.
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One of the best methods of technical analysis at the beginning is to know the direction where it is heading
Including the ascending channel and the descending channel pattern
When drawing an ascending or descending channel, the tops of the bottoms are greater than the peaks and bottoms behind them, and usually there are three peaks or troughs, and then the break comes after
To properly draw the pattern, link the tops and bottoms of each other so that the pattern is formed
This in a nutshell
Nothing unexpected we covered this signal 26th AugustNothing unexpected we covered this signal 26th August
Here is an update with previous drawdowns between 23% & 91%. NOT ADVICE DYOR.
BTC: How to Trade BTC Right Now - Smart and Disciplined StrategyHere we would like to suggest to you a breakout strategy that we know that can bring guaranteed profits for any trader. This is the most safest strategy that bring the highest rewards, lower risk, and still expose you to the market in a time of volatility.
First things first, making a position with zero discipline is a recipe for disaster. We all would like to take a position right now and hope that it will go the anticipated direction of our long or short. No one knows where the market will be heading to, and although the market is in a considerably bullish state, it doesn't mean that it will just shoot straight (although we love for it too!).
The best possible way to approach the current rising wedge we are seeing at the moment, is to make sure and buy or sell on the BREAKOUT. The breakout doesn't mean, "it's breaking out, I should get in!". It's simply, a retest of the breakout. A retest of the breakout almost ALWAYS occurs unless there is some kind of anomaly in price action (impulse wave) - but even this, is always followed up with some form of follow up pullback.
Another interesting thing is we are trading below the legacy trendline from the log chart on the daily:
Please let us know, are you bullish or bearish?!
Bitcoin set to smash ATH in the next 8 to 12 WKS thanks to......Astronomical returns possible: Bitcoin set to smash ATH in the next 8 to 12 WKS thanks to "Big Oil" signal after SPX setting ATH's >> WK 16 DEC 19 63% 8 WKS >> WK 25 SEPT 18 437% 11 WKS >> WK 28 JAN 13 1383% 10 WKS. The only time signal did not work was when bitcoin MACD histogram was in red. CAVEAT: WTI Crude Oil Weekly MACD line (source HIGH) has not yet closed >0. Big Oil signal still needs to confirm. NOT ADVICE. DYOR.
