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.

btc1hr.png

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.

$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.

gup4hr.png

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.

$POLL TA/Outlook

POLL has been one of my favorite coins for a couple weeks. I entered it when I spotted some upcoming events and a great TA entry. I am up more than 600% since my entry on this coin but I believe it will still go up.

The chart is forming a bull pennant and the 4 hour RSI has cooled off considerably. There are upcoming events on January 17 (Clearify launch and a major partnership announcement).

poll4hr.png

I have sold enough of this coin to cover my original investment and I’m holding the rest. This coin has huge potential and I think it is still bullish.

$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.

$THC Entry & Analysis

Today I entered THC. Here’s the website. THC has an upcoming rebrand, new whitepaper, and brand new website. This is all supposed to happen on January 26th. The events drew my attention to this coin. Rebrands tend to draw a lot of attention to coins and in the past have resulted in success for the coin (project and price). The THC team is also planning on implementing masternodes. For an explanation of masternodes, click here. Adding masternodes is a huge catalyst for coins, and coins that add this feature almost always experience a price increase from this news alone. The developer has stated that the required amount to start a masternode will be 20,000 THC. Even if this coin doesn’t end up serving any useful or unique purpose, the attention from this complete overhaul of the project’s image will boost the price (welcome to crypto).

Next, I took a look at the fundamentals. THC has a total supply of 230 million. The project was dormant until early last year and by reading the forum posts, people have been buying this up since December 2017 in preparation for all of these January events. THC is a proof-of-work and proof-of-stake coin, meaning you can mint new coins by either mining them or simply holding coins in a compatible wallet. This means that the average person will have incentive to hold the coins in their wallet instead of just selling them when the price goes up which is great for the price because it creates more demand and less supply (on the market). The thing that convinced me to enter at the earliest possible good entry was the rich list. Here’s a link. As you can see, the top 25 addresses hold over 50% of all the coins. That could be some massive whale accumulation. All of this has convinced me to enter the coin. Next, I just had to do some TA and find a good spot to get in.

As it just so happens, now is a great time to buy this coin. Here’s a chart:

thc4hr.png

This is the 4 hour chart. As you can see, we are currently on an established support with 3 touches so far on the 4 hour. I entered at .000039 BTC (3.9k satoshi). There is another support at .00003 BTC (3k satoshi). If we break the first support, I will add more at the second support if we make it there. It seems likely that we break the first support, but I kind of doubt we make it all the way down to the 3k satoshi support so keep a close eye out for a good entry and check the chart often. In the meantime, try to keep up-to-date on any announcements or rumors with this coin. Pay attention to the bitcointalk thread and set Twitter alerts for their account.

$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.

$ZCL Update

ZCL is moving along nicely. I’m not really looking to day-trade this coin as it is important to maintain a good position in a coin that has such a big catalyst coming up, but we did verify that support from my entry and now it looks like it is just cooling off. We may come down and touch the support again before we see another major price move. If we break support for any reason, I’ll be adding and averaging down as we go (unless there is bad news about the airdrop). At this point, we are just waiting for some more news about the airdrop (what exchanges will participate, when the exact date is). You should be on your toes with this coin, but if all goes well this should be a very profitable trade. zcl4hr.png