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 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.

$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.

$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.

gup1hr

$ZCL Update

Earlier today, I entered ZCL. Following my entry, ZCL pumped by almost 40%. It has since cooled off and I’m now up around 15% on my original entry. This coin has a long ways to go in my opinion. The direction of the market is dependent on BTC’s moves, unfortunately. I’ll be watching ZCL closely in the coming days/weeks leading up to the BTCP fork. Here’s a chart:

zcl1hr.png

I think that ZCL will maintain an uptrend and may not even retest the established support for quite some time. It looks like it may be preparing for another leg up.

Trading on 1Broker.com

I love trading cryptocurrency, but we all know that these markets won’t last forever. Over the past couple weeks, I’ve been trying to become familiar with trading traditional markets. I have been looking at charts, articles, and some trading strategy. At first, my plan was to deposit to eTrade and try my hand. But then I remembered that I have an excellent tool at my disposal. I have an account at 1Broker. Through 1Broker, you can trade stocks, commodities, forex, and crypto all using a Bitcoin balance.

Here’s my referral link

Here’s not my referral link

I won’t be making posts about my traditional market activities on this blog, but I will try to tweet about them occasionally. Of course, right now I’m just starting out and getting a feel for charting these assets but I hope to be able to provide you with valuable insight very soon. Thank you all for following!

$GUP Reentry

I called my exit from GUP before the market movement last night. I was able to get out with a slight profit. At that time, I made it known that I would be looking for a better reentry because I think this coin is bullish long term. Last night, I reentered GUP. I was able to get one entry at .0000715 BTC and another at .000074 BTC. Here’s a chart: gup4hr.png

The 4 hour RSI is way oversold and although we dropped below support last night briefly, we got a great bounce and I think that the upper support is still intact. I will obviously adjust as time goes on and things change, but for now I’m comfortable holding GUP until their two product launches later this month. If we break below .000074 BTC, I will be selling off my higher entry to get in at a lower price once again.

$ZCL Entry

Last night during the market-wide dip, I scooped up some ZCL. I had been holding this since .007 BTC, but thought this was a great time to add more. Here’s the chart: zcl4hr.png

As you can see, the 4 hour RSI has been floored for days. We’ve just been on a slow bleed. This has some to do with the huge spike it experienced over the past couple weeks and needing to cool down from that and also the market dip that occurred over the past couple days. ZCL has an upcoming snapshot for the BTCP (Bitcoin Private) fork.  BTCP is touted as Bitcoin, but with privacy features. Since I am very bullish on privacy coins (as is everybody in the space), this seems like a great opportunity for holding both ZCL and BTCP. I also anticipate at least one exchange announcing support for this snapshot and crediting account holders with an equal amount of BTCP as ZCL that is held in the wallet. The prior Bitcoin forks are clearly a joke and don’t have much utility, but this one could actually get some traction. If BTCP reaches even the mild success of Bitcoin Gold, this could be a very lucrative trade. Not only do I want the BTCP, I am also buying this for the ZCL price increase. As the fork gets near, the price of ZCL is bound to go up. Unfortunately, it will likely dump heavily whenever the snapshot happens as other coins have done in the past (NXT). So, I will also dump ZCL after the snapshot at (hopefully) a massive profit and then wait to be credited with my BTCP. Here’s a 1 day chart:

zcl1d.png

The 1 day RSI is at the bottom and we are on possible support. I love this coin and its price outlook for the next couple weeks. I will update as the market moves but for now I am buying this on support.

Market Update

Last night, the market received a pretty thorough beatdown. The only coin that I sold during this was SALT, as I did not like the way that it was going against what I thought would happen and thought it would be best to secure my profits and move on to the next coin. I am still holding ETH, OMG, NEO, ETC, CAPP, ICX, SUB, and a few other small coins.

On the market dip, I added ZCL (upcoming Bitcoin Private Fork), and GUP (Coin I exited earlier the other day but it has catalysts).

The reason for the dip seemed to be that South Korea was contemplating a cryptocurrency ban. This is nothing new. This type of FUD (Fear, Uncertainty, Doubt) comes up every couple months and the market always bounces back. I will be watching Bitcoin closely because it’s an indicator for the rest of the market so if things look bad there I may decide to move some funds to USD to hedge against the market dip and look to buy some stuff while it’s low. The BTC bounce from the dip has been rather weak, so it may continue down. The Altcoins, however, have been bouncing back pretty well overall.

I will update with a chart on my entries later today. Thank you for reading!

$SALT Update

I have exited my position on SALT. I recorded a decent profit, but wasn’t seeing a bounce that I liked following the other day’s spike. I may look to reenter this coin, because I think the platform has a lot of potential, but having it break out of a falling wedge/channel downwards was too bearish for me to continue holding. I’ll be watching closely, but for now I’m out. salt4hr.png

The 4 hour chart actually looks decent, but so far charting this coin hasn’t been going that well for me. The 4 hour RSI is on the way up and we did bounce off an established support during the market dump last night. I’d say things look overall okay for SALT, but I like to go for trades that I’m more confident in. I was able to nab a 15% profit on this coin by averaging down my entry and selling my high entries on the spike the other day.