Methodical Trading - Volume 10 - "Choppy Waters... What About Altcoins?"
Bitcoin, Ethereum, Altcoins, and general market information
Bitcoin continues to chop traders away as it fails to make a decisive move for the next major trend. On high timeframes, Bitcoin still looks bullish, but price has yet to break $20,000.
Ethereum and Altcoins have shown signs of strength. Defi coins have primarily been the big movers to pay attention to in recent weeks.
Talking Points
Bitcoin
Ethereum Update
Altcoin Setups
Fundamentals & News
Bitcoin
Bitcoin has been relatively dormant to start out December in comparison to recent months. Beforehand, large volatility spikes followed by a decisive uptrend was the primary consensus of the market. However, the current price action with no decisive break towards the upside or downside has created a choppy environment.
Taking a look at the 4 hour, the two levels to pay attention to are $20,000 and $18,600. A clean break and hold above the $20,000 level would be a strong signal that Bitcoin can indeed move higher. However, a 4 hour candle close below $18,600 would be a sign of weakness and likely lead back towards $17,800. As of now, price action has not given a clear sign as to which direction the market will break. It is best to stay clear of this choppy price action in order to protect capital.
Playing the market 24/7 is absolutely not a necessity. In fact, trying to play the market and get every move correct is a quick way to lose it all. Trading requires patience and timing. Finding the edge in the market is one of many key aspects to becoming a successful trader. As of right now, the market has no clear direction in current price action. We’re simply making higher lows and lower highs on our 4H, meaning the current trend is consolidation. In these consolidation ranges, you may find it best to sit out entirely and wait for a trend to form. Remember, cash is also a position!
Ethereum Update
After a brief visit around the $500 region, price has successfully rebounded and continues to test the $620 region.
On the 4 hour chart, price has already tapped the $620 weekly resistance three times. While this level has hammered price down and offered solid entries to Short sellers, any further taps of this level would be alarming for further entries. Simply put, the more a Support/Resistance gets tapped, the weaker it becomes. This absolutely DOES NOT mean to take Long positions directly at resistance, but it is something worth noting for any trader that is interested in taking Shorts at this High timeframe resistance.
There are some arguments that the recent price action has resembled a Cup & Handle formation. A measured move of this pattern would take ETH/USD to around $740. Generally speaking, the Handle should not extend more than half of the Cup. Volume should also be increasing as price moves higher from the base of the Cup. Only 1/2 of these requirements have been met to fit the pattern. However, chart patterns are not always going to be printed as they are shown in the textbook. The pattern here is still noteworthy for now and similar to Bitcoin, taking a position amidst the current price action is less than favorable. Waiting for a breakout move would be ideal as pictured below.
A break and hold of the $620 resistance level would be a good sign that we’re flipping this region into Support. A favorable Long setup here with great R:R can be taken with targets upwards of $740+. Note that this is contingent on a BREAKOUT and successful FLIP of the $620 level. If price were unable to break this level, then a visit towards the Gray region around $500 would be the primary level to pay attention to. We currently have the 4H 200MA/EMA residing in this region, and we should expect them to act as strong support in the case of a bigger breakdown.
Altcoin Setups
SUSHI/BTC:
Defi has been the big narrative for Altcoins. $SUSHI has recovered nicely against the BTC pairing and is potentially looking for some bigger moves towards the upside. This is another BREAKOUT trade to take upon the flip of the Gray region, similar to our ETH idea above. The three key levels to pay attention to are 1603, 1850, and around 3000 Satoshis. As long as the market holds up and the Defi narrative continues to be pushed, we believe that $SUSHI could be one of many big runners going into Alt Season.
AAVE/BTC:
$AAVE also appears to be breaking out here on the Daily after flipping the 4400 region from Resistance into Support. This old range back from August-October looks to be in play again and the logical target would be the top of the range near 7200 satoshis. The USDT pairing is also making fresh all time highs as well. Overall, $AAVE is looking primed here and offering favoring Long setups with great R:R.
RSR/USDT:
$RSR looks great here on the Daily after retesting the Gray region twice. A small reaction has been seen so far and a Long setup here offers a good R:R here. It’s worth Dollar Cost Averaging into this position if it dips slightly lower into the Gray region. The Stop Loss just below the two wicks on the Daily can be loosened as well. Overall, RSR should be able to revisit the highs from mid-November as long as price can continue holding this Support.
ADA/USDT:
After breaking above this huge Resistance on $ADA, the current Weekly candle looks to have completed a successful retest and flipped it as Support. As long as price holds up before tomorrow’s Weekly close, this would become a trigger for taking a larger swing position that would take price back to the old range from mid-2018.
Fundamentals & News
Yesterday, it was announced that MicroStrategy has purchased more Bitcoin in accordance with their Treasury Reserve Policy. Michael Saylor, the CEO of MicroStrategy, made the announcement yesterday on Twitter.
Additionally, Paul Tudor Jones also provided further comments on Bitcoin as well a couple days ago.
As time goes on, more and more big money players continue to take action in exploring the Crypto Currency market. Is the current Bitcoin bull market over because it failed to break $20,000 the past week and a half? Absolutely not. Stay calm and HODl on!
For those familiar with Options, the $36,000 Bitcoin calls are the leading strike price. This is quite abnormal and worth paying attention to if Bitcoin were to break $20,000 and continue to make fresh All Time Highs. I have kept this in the back of my mind as to where could Bitcoin could top out.
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