On May 15th I drafted a bitfinex daily chart with three trendlines that originated from the pendant leading to 9.9k and from the selloff shortly after 9.9k. These trend lines intersected, in the yellow zone, with the major daily support that we have been following since November. Since publishing, BTC had sold off 15.5% with a max drawdown of 3.4%. Now upon review it appears we may be breaking downtrend shortly with tight 12 hour bands.
Do you think this was just luck or that we can apply this to future charting?
In my first blog post, I briefly discussed my utilization of 3-hour ATR and BB Width in cryptocurrency trading. Recently we traded two bitcoin pops, 15.8%, and 4.9% and thought it made sense to backtest this strategy over the past two months. Above we see 5 cases returning >17.5% each time.
This morning (4/1/18 5:30 AM EST) I launched my first Daily Articles of Interest newsletter which includes two economic whitepapers, three macro charts, and countless weblinks. Check out my archive and subscribe below!
On March 27th at 7:30 PM when Bitcoin traded at $7,835, I posted a video on social media pointing out the technical case as to why Bitcoin and the cryptocurrency market appeared to be due for a major selloff. Nearly 48 hours later Bitcoin had declined 16.5% to $6,533. I personally traded this selloff via 78,000 XRP short at .57 on Bitfinex as the borrow interest rate is very low due to its large float, and the volatility is greater than bitcoin allowing for greater returns on top of the 3.3x margin.
As Bitcoin traded in a tight range prior to and shortly following 7:30 the 3 hour Bollinger Band Width indicator in Yellow and Average True Range in Blue decreased steadily, and theory tells us volatile price action is bound to occur shortly after, and that is exactly what we saw.
Certainly not claiming I nailed the bottom of this trade, I am just indicating the large volatility and power of the declining ATR and BB Width.
On 2/11/18 I funded a TD Ameritrade brokerage account with $7,000 to trade short-term options. You can track my P/L here.
My personal day trading experience began in 2013, but today I invite you to join me on my journey through the equity and crypto markets.