Basic Technical Analysis: Drawing Lines

The purpose of this post is to show my thought process as it pertains to lines on a chart. Support and resistance lines are very important for getting good entries and exits. It’s also one of the few things I use and take into consideration when evaluating a stock or crypto. As you can see on the chart below, I’ve been drawing some lines on this recent Bitcoin price movement for the past couple days.

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The first thing I noticed when I started drawing these lines two days ago was the descending wedge. You’ll notice that on the chart as the triangle pattern pointing down. The lower line of this pattern (support) is considered a good entry as long as it is towards the bottom of the pattern. You’ll see that as the pattern comes to a close, we see upwards price movement, which breaks the top line (resistance). Profit should be taken when the Stoch RSI appears to be capped out at the top (the bottom indicator on the chart).

After the significant retrace from that increase, I drew a line from the peak of this local pattern to the peak of the breakout from the falling wedge. I also drew a line along the bottom points to create two parallel lines, which makes a downward channel. The bottom line is support and the top line is resistance. After the retrace, we came back down to support for another touch on that line. BTC attempted another touch only hours later, but was rejected with significant buy support. This was my signal to get in. I saw signs of BTC bucking the downward channel. I entered the trade at that point and exited when we did see a spike towards the resistance. I played this one safe and exited before resistance because I thought it was possible that we might get rejected and continue down. I was able to make profit, but it turns out that I exited a little too early. That’s okay, though. Profit is profit. Don’t every weigh yourself down with what could have been.

Currently, we are seeing Bitcoin use the former resistance as support as we retrace from our breakout. What I am watching for here is if we fall back into the channel or if we bounce from here. This is a no-trade zone for me and I’ll be sitting on the sidelines until I see an opportunity. Sometimes the best trade is no trade at all.

Passive Income In Crypto: Part 1

Everybody wants to make money while they sleep, right? I do too. It’s always been a dream of mine to live off of passive income while I do whatever I please with my time. There are a lot of ways to do this, but they are all either extremely difficult to get started or require a massive amount of capital. Let’s look at the ways by which you can accomplish passive income in your everyday life:

Interest

Mutual Funds

Mutual funds can be great–for preserving already existing wealth. A good solid mutual fund will be lucky to get 8-10% a year, which is awesome if you’re looking for a solid way to store wealth while also making some gains. Is it a practical way to pay expenses and generate income, though? Let’s say you have $100,000. You put it on a mutual fund and it gets you 10% over the course of a year. Congrats, you’ve made $10,000. Take some taxes and brokerage fees out and you’ve got a cool $7,500 in your pocket. It might pay your rent for a year, but after you’ve done that you still have $100,000 sitting in the account and it’s going to generate close to the same amount every year. So, even assuming that you have $100,000 free cash, it’s not a great source of passive income for the average person who wants to use that money to better their lifestyle.

High Yield Checking/Savings Accounts

Again, these are great for people who need to store wealth, but not so great for those that want to generate substantial income passively. My credit union offers 2% APY on their checking accounts. I’d rather keep my money in crypto (any crypto).

Bonds/CDs

The interest rates on these are dismal. Last I checked CDs were under 2%, and you need to lock up your money for a lengthy period of time. You’re kind of getting the point here, right?

 

Businesses

Rental Properties

Buying a rental property was one of the first options I explored. It seemed like real estate was the business to be in if you wanted to be wealthy and property also happens to be an excellent, tangible asset in my opinion. This option obviously comes with some drawbacks. Again, you’ll have high overhead costs because you’ll either have to shell out a massive amount (to the average consumer) in cash to purchase a property or you’ll have mortgage payments if you choose to finance the purchase. You’ll also need a knowledge of home improvement and basic construction as you’ll definitely be dealing with repairs, unless you want to pay somebody to handle all of it. Finally, the tenants. I’ve only lived in two apartment buildings in my life and I can confidently tell you that I now have absolutely no interest in being a landlord. It sounds passive. I can just buy a property and collect the rent every month. Hell no, man. You can’t. It’s way more trouble than it’s worth unless you have several properties in a high-rent area and you really know what you’re doing. Finding good tenants, ensuring they pay, fixing the property when they inevitably destroy it, etc. Does it all sound worth it to you? Because it doesn’t to me.

Opening A Business

Awesome! If you either have a great idea, lots of money (or the ability to raise the money), or some really great connections in a niche market. You’re looking at high overhead, massive startup costs, and a really high risk in most industries. You’ll probably have to quit your job and go without steady income for a few months while you get things up and running. Assuming you make it past that, you’ll need to find some great staff that you trust to run things while you’re away. The only way this option becomes at least a little passive is if your business really takes off and you end up being able to leave the store alone with your staff all day. Most people don’t make it that far.

Opening An Online Business

This is probably the most feasible out of all the options I’ve outlined so far. Opening an online business is fairly easy. You can do it in an hour if you’re comfortable using the computer. The real struggle here is marketing the business. You need to know at the very least, how to use SEO and Facebook ads incredibly well in order for you to have a chance at success. It will also help you to know how to code in HTML, JavaScript, and CSS at the very least. This will take some trial and error. You will burn through a couple thousand dollars to get it started and it will not come easy immediately. There are huge success stories, though. It can work and it’s probably your best option if you’re looking to open a business. In the beginning it won’t be passive, but if you’re able to figure it out it can definitely become passive.

 

So, here’s the problem. Almost all of these options require a massive amount of startup money to be viable sources of income independently. Our financial system and economy is currently set up in a way that benefits the already wealthy. If you $2 million and you are in a mutual fund that earns even 8%, you’re sitting on a yearly income that is 4x that of the average American. All because you already have a lot of money. Examples like this are the reason that crypto is so appealing to the younger generations who have less money. They know that there is a better way to live. They know that our economy can be better and our financial system is completely rigged.

Cryptocurrency opens doors to a world that was previously out-of-reach for the impoverished, unbanked, and underpriveleged. It makes living a life not filled with 40-hour work weeks possible. There are ways to make viable passive income that will actually make a difference in your life by using cryptocurrency. I have exclusively used trading as a way to make money, but this year I want to build passive income that will ensure I have more time to spend with family and do the things that I want to do without worrying about money. In part two, I am going to outline my plan for how I plan to achieve this.

 

 

 

$GUP Update

GUP has been scraping along my drawn support line while the 1 day and 4 hour RSIs reset. On those timeframes, we definitely look ready to pop off in a big way.

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The 4 hour RSI is on the bottom and has started to curve up.

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The 1 day RSI also looks phenomenal. It has been floored for several days and I think it’s unlikely that we don’t see a major jump pretty soon.

GUP has product launches on both the 18th and 22nd. We are approaching those dates quickly and the technical analysis for GUP has set us up for hopefully some great gains with GUP.

The only foreseeable scenario in which I see GUP going down in the short-term would be if we see a BTC bull run tomorrow, which is very possible. However, lately it seems as though alts actually pump with Bitcoin, so that could create a very interesting scenario. Either way, tomorrow I’ll be watching all my holdings closely as I think we will see some great price movement.

$GUP Update

GUP has been filling out this triangle exactly as I had predicted.

gup1hr.png

As expected, we bounced off of support. I have a feeling we will head down again to retest. If we break the support, I’ll be looking to unload what I have for a profit and buy in at a better entry. From here, I expect to see some upward price movement to meet the resistance again. In my opinion we will have a couple more days until we break out of this formation.

$CAPP Update: We Have Liftoff

CAPP experienced a 20-30% price increase today. I am not getting close to a selling point yet, as I still think this coin has some room to run. Here’s a 4 hour chart:

capp4hr.png

As you can see, the 4 hour RSI is getting close to the top, but I believe this is the beginning of a sustained run. I’ll be watching closely. If it pumps really hard, I will try to sell and catch the top and then reevaluate for a potential reentry.

$ZCL Update

ZCL has been gradually making its way upwards. The 4 hour RSI needs to cool down in my opinion. zcl4hr.png

I think worst case scenario–we bounce back off support on a 4 hour retrace. The daily chart is still very bullish though so any kind of dip won’t last long in my opinion.zcl1day.png

Despite a long period of growth, the 1 day RSI is still floored. I think we are going to see some more major moves leading up to the fork date announcement and ultimately the fork itself.

BTG and BCD both experienced sharp increases today, so that bodes really well for the BTCP fork.

Still holding ZCL.

$ZCL Update

ZCL held up great overnight. Instead of coming back all the way down to support, we got another leg up. We are now consolidating and the 1 hour RSI is almost reset. The Bitcoin Private Twitter account published an encouraging tweet yesterday, encouraging us that progress is being made. The next thing we need to watch for is whether or not Bittrex will support the airdrop. That would be huge news and it would undoubtedly validate the project. I think that once ZCL and BTCP announce a specific date, we will see an announcement from Bittrex.

zcl1hr.png

On the 1 hour chart, we are currently consolidating while the RSIs cool off. I doubt that we see that bottom support line again unless BTC makes a big run. Here’s the 4 hour chart:

zcl4hr.png

The 4 hour RSI is still high, but it has retraced a little. Once the 4 hour gets a little lower, we could see another leg up immediately. Again, I am watching this coin closely because of how fragile these projects can be, but I’m not looking to day-trade this coin. Holding until the BTCP snapshot.

$CAPP Update

CAPP has been moving sideways for days. I am up 10% on my entry, but I’m looking for a little more here.

capp4hr.png

CAPP has news this month and a conference as well. I expect us to go for another leg up relatively soon, but CAPP is taking its sweet time as you can see. The price has held up well and the 4 hour RSI is floored, so we are still looking great. I love this coin and I love the buzz around it. Holding this until further notice.

$GUP Update

After the big push up for GUP, it seems destined to come back to the bottom and bounce off support. gup4hr

The 4 hour RSI has crossed and begin to descend. If we see GUP take a rather gradual fall to support and the 4 hour RSI is able to reset with GUP only going down halfway through the triangle, we are looking great. Otherwise, we will touch on support again and continue to fill out this triangle and hopefully break upwards on the back of news coming this month. Still watching GUP, but I’m fairly confident holding this one for a week or more at this point.

$GUP Update

GUP had a great morning and I am up more than 20% from my reentry. I feel good about GUP going forward because it has two product releases coming up and hasn’t fully completed it’s cycle as a lot of the other coins have really shot up in the past few days. What I expect is for us to continue to fill out this triangle and eventually break resistance upwards. It is very possible that GUP could break the triangle now, but in my opinion it needs to cool off for a bit. If you haven’t entered, I think the next dip would likely be to .000085 BTC but a very safe entry would be more like .000077 BTC. I will keep you updated on GUP as things progress.

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