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Bitcoin's Squeeze in price is building momentum upwards I hope you are well this Sunday. If you have been following my Bitcoin thread this weekend, you will know that price has further to fall, if the Bitcoin market is to tank downwards. What I am saying is that we are in a squeeze moving price down and up which contracts price and causes the squeeze effect, which quite frankly is needed in circumstances where volumes are again low this weekend. But this squeeze is building momentum in the Bitcoin tank. Bitcoin price has recently tested the level just under 69000 which is a big support level. Unfortunately some Stop Losses would've been triggered and price has taken the liquidity and moved higher. I never like to promote a stop loss level to someone, but I think it's reckless if I do not in circumstances where price tanks. Please take a look at a recently Daily Chart of Bitcoin. I present Fib Levels & Fib EMA's 8,13,21,55. Both are supportive of price to move higher from current levels. 69,000 and thereabouts is the support zone and I think this level will hold.
EIGHTCAP:BTCUSDLong
by Easy_Explosive_Trading
Price Action & Psychology - Pullback, Trend, SupportHello ! Key points : Notable support zone Pullback after breakout Direction of trend Volume spikes on uptrend We've pulled back to an historical important zone, which acted as support. We're taking this trade after a breakout on high volume and wide range candles in the direction of the general trend. Volume represents the number of shares traded on any given day (talking about a daily chart). So if on that spinning top (2) we've seen high volume, but prices didn't rise, this must mean that sellers were stronger. I see a few clues here : Those that bought on the previous resistance (1) and were stuck, sold Profit-taking from the breakout (2) The pullback made other traders sell Considering the price action on the last 2 trading sessions, we see relative low volume and some indecision, we've reached a certain " balance ". This tells us that basically, most of the traders are waiting on the side lines. What we're looking for here, before we take the trade, is volume . We wanna see buyers come into the market. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
KLong
by UnknownUnicorn6734025
6 IRRATIONAL BEHAVIOR AND THINKING PATTERNS - THINKING CLEARLY !Hello everybody and welcome, I hope you'll have a pleasant time reading this. And I also hope it'll somehow be useful to you. --------------------------------------------------------------------------------------------------------------------------------- Let's face it, your biggest enemy in trading is not the market, not the hedge funds, not the banks, it's you. Thinking clearly is one of the hardest things to do when trading/investing. We've all, at least once, done something and asked ourselves afterwards, "why did I do this ?" or "how didn't I see this" ? Did you know that this is called the "Hindsight bias" ? Yes, it's a well-known phenomenon in psychology. Before we begin, let me explain the diagram. Developing clear thinking takes time. You'll find it very hard at first, but as time goes by, if you keep your focus on it, you'll notice your performance increasing exponentially (this also applies to your life in general !). --------------------------------------------------------------------------------------------------------------------------------- 1. Confirmation bias The confirmation bias, is the distortion of information to make sure that it fits our beliefs. Let's think about it that way : if you think that the world is an awful place, you'll find facts to back your belief about the world. What happens when you encounter a fact that denies your belief ? You either ignore it or distort it in order to make it fit your belief. It's about the same thing when you're trading. Sometimes, especially new traders, hold bags, meaning that they hold on to losing positions for a long time, hoping for a recovery. No matter what, the trader will find himself putting more weight on the information that confirm his belief (that he's right) and will ignore the information that refutes it (that he's wrong and should sell). In order to avoid the confirmation bias, you need to weigh every new information the same way . 2. Hindsight bias The hindsight bias, is directly correlated to the confirmation bias. We tend to understand things better in hindsight than we do in the present moment. To take the previous example of the trader that holds bags a little further : what happens when the trader decides to cut his losses ? He immediately says : "Oh, all the information I had indicated a clear downtrend, why didn't I cut my losses earlier ?". The hindsight bias. In hindsight, everything appears to make sense. In Trading, the best way to avoid this bias, is to react to the market information that's available to you, rather than trying to predict it or to hope for something to happen. In other words, when you have an edge, you trade your edge and you remain open to any information the market gives you, be it information that confirms or invalidates your initial belief. 3. Loss aversion We feel better losing nothing than winning something - say hello to loss aversion. Overall, humans are more sensitive to negative things than to positive things. Think about how much we complain. Sometimes, it's justified, but often it isn't. We complain about things we don't have, but omit to be grateful for everything we have. In trading, loss aversion, is the pattern that makes us hold on to a losing position for a long time. After all, an unrealised loss is less painful than a realised one. To avoid loss aversion, you have to work on your mindset and start thinking in probabilities. 4. Outcome bias This is another very, very important psychological trait that messes with our trading. Human beings tend to judge a decision by its outcome, rather than gauging the decision process. In the best case scenario, you have an edge and you act on that edge every single time you see it appearing on a chart. The problem is, because trading is all about probabilities, sometimes, your edge won't work. Does this have something to do with the process ? Absolutely not, it's just how trading works. But, when you aren't aware of it, you start questioning your trading strategy, even though, the outcome is not correlated with the process. Just be aware that the outcome is not a reflection of the process . 5. Action bias Whenever we do something to compensate for our inaction, we fall for the action bias. We rather do something useless than nothing at all. If you watch football, you've probably witnessed this bias a lot of times. When the opposing team shoots a penalty, the goalkeeper, either dives left or right, even if chances are that the opposing player shoots right in the middle. Why ? Well, diving looks way better than just standing still, whatever the result is. As Jesse Livermore would say, " Money is made by sitting, not trading ". Considering this bias, for us human beings, it is hard to sit and do nothing. Just think about what you do when you have to wait, be it in a waiting room or at the bus stop. This could be an explanation why most traders fail. They struggle letting their trades unfold and get caught into thinking that their inaction is harmful. Eventually, they end up overtrading, taking trades they otherwise wouldn't, to avoid inaction. "All of humanity's problems stem from man's inability to sit quietly in a room alone", Blaise Pascal. 6. Overconfidence effect Overconfidence is a very evil trait to trading. When we are overconfident, we tend to overestimate our knowledge and take bigger risks. Financial markets are unforgivable with overconfidence. Markets really are unpredictable, therefore we shouldn't even try to predict them. We need to go with the opporunities that the markets make available to us . The best traders are aware of it, therefore they try to be humble and respect the markets. As an example, we could imagine a trader that is on a 5-trade winning streak. He feels great, he feels invincible. What happens ? He takes bigger risks and one day he'll inevitably issue a huge loss.
BITSTAMP:BTCUSDEducation
by UnknownUnicorn6734025
4
Price Action & Psychology - Pullback, TrendHello ! Halfway retracement Key support zone Direction of the trend + wide-range candles Indecision + spike in volume Charts are like books. They tell us a story. We're trading in the direction of the trend, marked by these spikes in volume combined with wide-range candles. What do the shadows/wicks tell us ? Well there's much conviction here. Whenever buyers are in control, they get very aggressive. Anyway, sellers still manage to bring the price back down (buyers are still in control!). Obviously, everytime the price gets over-extended it retraces, usually on low volume. This shows that sellers are : 1) not being aggressive, 2) not being numerous. In other words, whenever prices get down, it's not a shift in investors/traders minds, but rather the natural course of profit-takers. The trade is pretty clear here. After getting rejected from the resistance (and breaking out from the range), the stock comes down, on low volume, showing low interest in selling the stock. The hint here, is the indecision candlestick coupled with a spike in volume. This means, the stock has arrived at an important historical zone and buyers are stepping in. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
CLong
by UnknownUnicorn6734025
Price Action & Psychology - Pullback, MTFAHello ! Key points : Pullback after over-extension Fading volume, downtrend losing steam Engulfing on higher volume Wide-range candles defining a strong upward movement I like pointing out the fact that stocks hold on to certain historical support zones. Traders and investors tend to remember them well, as you can see below : The general trend is "bullish", meanwhile the temporary trend is "bearish" (correction/pullback). The fact that we saw the volume fade means that the downtrend is running out of steam. In fact, the engulfing pattern we see, coupled with a higher volume on the green day, confirms the theory that buyers are taking control back, i.e. the primary trend might be about to resume. Now, on the weekly chart, we spotted that old support zone. And this is what the hourly chart looks like : Pullbacks can be seen on any timeframe. It seems like that support we defined previously, still matters. Because stocks never move straight to the upside, we can expect a pullback on the hourly chart. This will be the signal we're waiting for. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NASDAQ:VVPRLong
by UnknownUnicorn6734025
Price Action & Psychology - Pullback after breakout, TrendHello ! Key points : Significant support Pullback after breakout Wide-range candles in the direction of the trend Indecision + volume increasing As I pretty much always do, I went back in time looking for major support and resistance zones. To do that, I switch to a line chart and I take a look at the 1-year timeframe, it's way easier to define the major zones. This is what it looks like : Getting back to our candlestick daily chart, we can see that we've had a breakout : very wide-range candle and spike in volume. Stocks never go straight "to the moon" and after breaking out that much, they usually need to "rest" or "breath". It started by declining quite fast (see the wider red candles below resistance). Then it started slowing down, we can ultimately say that the counter-(down)trend is losing power. In other words, sellers were in control, but buyers are coming back in, since the major trend is an uptrend, as the trendline shows. We saw some more "fights" between buyers and sellers during the last 3 trading session. What tells us that the uptrend is pretty strong, are the wide-range candles we see going in the direction of the trend. Finally, on the last trading session, we have a clear price rejection, with increasing volume. My entry will be around the last close and I'm using the ATR (based on 9 days) indicator to get an idea of the average volatility of the stock. This helps me defining a stop loss. I'm using the previous resistance as the first target for my trade. Considering the setup here, I can imagine the stock price breaking that resistance and making a higher high, but because I can't predict it, I'm going to take some profits at my first target, and then I'll work out what to do with what I've got left from there. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NYSE:WOWLong
by UnknownUnicorn6734025
Price Action & Psychology - Double bottom reversalHello ! Key points : Double bottom, cluster of candlesticks on first bottom Narrow range + low (relative) volume Buying pressure on downtrend I'm defining the resistance (previous support) based on the second gap (Gap2), on the distribution area and on the clear 3-candle swing high. To clarify, above the drawed resistance (previous support) we had a distribution period, followed by a move to the downside (see the spike in volume and the wide-range candles). The selling formed a cluster of 3 candlesticks, defining a pretty strong support. The last selling wave, that formed the second bottom, is pretty indecisive, the volume is low, there's always some buying pressure and the candles are narrow, it's following the path of least resistance, i.e falling from it's own weight. Weekly chart : From a weekly perspective, the rejection and the gap up stress the irrationality of the move. PS : I'm defining my stop loss based on the gap up (Gap1) that happened after the move to the downside from March. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NASDAQ:GDYNLong
by UnknownUnicorn6734025
Price Action & Psychology - Pullback, accumulationHello ! Key points : Accumulation zone Halfway retracement Volume uptrend > volume downtrend Currently, I feel like there's an accumulation going on. In fact, we have some clues that buyers were strong : 1) we see several spikes in volume 2) the bodies of the candlesticks grew wider the more the trend advanced As you can see, we've had a little 1-candle pullback at first. Then, the trend resumed, the stock encountered a resistance (previous support on the left side) and pulled back halfway before accumulating. Obviously, from a realistic point of view, the stock could go any way from here. But, as always, we're trying to stack the probabilities in our favor. During the accumulation, the volume was relatively "normal", except for that spike I highlighted. The thing is, despite the high volume, the price didn't move. This tells us that sellers are not able to win the fight against buyers (since we're pulling back from an uptrend movement, buyers are still dominating). Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NYSE:MODLong
by UnknownUnicorn6734025