4hr BTCe - Bat Point D target hitHello all,
as we approach the official news release of the Silk Road auction price has moved into an interesting location. As was mentioned previously, the move through $610 over the weekend has registered a wide double bottom off the 38.2% Fib level off the higher time frame charts. This bodes well for BTC over the longer term, however, when we drill down to lower time frames the picture isn't as rosy.
Indeed, the rally since last Friday has been a little suspicious to me considering we have moved more than 15% on little to no actual news. Over the course of the rally momentum readings have gone from oversold back into an overbought condition. We have completed a rather well defined bearish 'bat' harmonic price pattern. And volume is clearly showing signs of fatigue. Put it all together and I for one shall have to temper my bullish enthusiasm for the time being.
I am reminded of the market cliche, 'buy on the rumor, sell the news'. Should the actual auction price be less then current market prices we may see a quick move back to those levels. For those lower time frame participants, this sets up an interesting trade possibility. As outlined on the chart above, shorting against previous highs (and risking to new highs) sets up an interesting reward / risk profile and something serious to consider. Like our most recent OTE long trade (which was buying against previous lows and looking for a test of the most recent highs) this 'range' strategy setup has a greater then 2:1 r/r profile.
There are of course is no guarantees and this is just another setup, but it does pose an interesting trade idea and frankly, if I had the PAMM service up at this point I think I might take the risk. Considering too our last three valid setups were all winners (taking almost no heat along the way) I would be more than happy to make this trade number 4 of the set and live with the result.
Cheers all and hope you can you this information to your benefit.
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LTC - When a setup fails ego should lose to career longevityHello all,
Today's post is more about professionalism in the face of failure then reporting any new setups. Recently, I had started to make the case for the Alt coins and their long anticipated catch-up rally to BTC. While I still do feel that scenario has a high likelihood of playing out, this production is all about LTC's recent failure and how I acted in the face of the failure.
I personally am a big fan of the 'double bottom' price pattern (W's) to setup up long trades and whenever I see a double bottom within a double bottom I get really excited. So to that end, I bought the double bottom within the double bottom on LTC (indicated level on chart above) with the anticipation that LTC might do a similar bullish harmonic price pattern move that BTC did and/or at least test the highs at/near $14.20. I was willing to risk to the bottom of the double bottom (10.06). This represented about $1.00 of risk for $3.00 potential reward. Put it all together and I felt the setup was within my plan and I took it.
As I have repeatedly stated in the past, I have yet to meet a trader who was/is 100% accurate and I simply do not believe such a thing exists. Indeed, as a prop crude oil trader, many of my peers would shoot for 60% accuracy. The key here is, when they were right they got paid 2 to 3 times how much they lost when they were wrong.
So this brings us back to my LTC long setup. It indeed failed and now managing the loss is really a testament to my professionalism and how it's handled is a direct proxy on my career longevity. As a broker I would watch people sit on losing positions and literally let months/years go by enduring the loss. Not only does this do great psychological harm, but it also ties up capital which may have found new (maybe even better) uses. I shall not take that road. I am more than comfortable admitting the setup failed, exiting at my stop level and booking the small loss. I have done exactly that and shall now move on to new ideas.
Cheers all and hope it helps
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S&P 500 - fast approaching upside targetsHello all,
hope you are enjoying the nice weather and even nicer stock market rally of late. It is a bit surprising to see the S&P 500 move to new highs into June but when a bull is charging it is often dangerous to draw lines in the sand. One can often get run over at best and even bankrupt oneself at worst. Regardless, a while ago I published this chart about potential topping zones for the SPY and I thought I would put it out there today once again and do some review.
Three component analysis:
Price: As well as hitting all posted bullish ab=cd harmonic price pattern objectives, we are fast approaching a trend line confluence that is sitting right on a 161% Fib extension level. We are not yet there but as we approach those levels one should take caution.
Volume: Volume/money flow still appears to be healthy and today's higher bar implies the buyers are not done yet.
Momentum: There are underlying signs that momentum is not healthy. At present Willy is rather 'stupid' which implies no new purchases should be considered. Additionally problematic, we have a potential bearish momentum divergence building within the raw MACD.
Put it all together and I would be super-duper reluctant to do any new purchases within the stock market in general until we get at the very least some sort of consolidation.
So with that said, lets review how our two 'camps' ought to be positioned currently:
Traders ought to seriously consider taking at least partial profits on longs established from lower levels at/near the indicated 'topping zone'. Additionally, at present it is way too early to start considering shorts as there simply are no setups to consider.
Investors who took CRI's last S&P Investment Model buy signal (December, 2011) are sitting on monstrous percentage returns and have absolutely no reason to touch those long positions.
Cheers all and hope it helps
You can find the slide show summary of CRI's S&P 500 Model on Google docs here: docs.google.com
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Crude Oil & The BoT - one way to play bull marketsHello all,
A trader's journey is one of self discovery. Learning to identify and then appropriately trade 'setups' is really about finding what you are comfortable with. It took me many years of self discover to find what works for me as I am sure it has for you. To that end, I found one model that I really like and it is my privilege to bring it to your attention. Take it for what it is worth, but it has aided me greatly in both executing a consistent trading plan and not getting anxious on trade location/execution. As I say in my tutorial, when I turn myself into a robot, I trade like a machine...
One reason why I like 'BoT' trade setup is because of its inter-market portability. Meaning, it is a model i can use to trade the stock market, Bitcoins, or in this case today, a commodity like Crude Oil. Here then is a bullish BoT setup in action. Notice the technical signals (MA cross, momentum upthrust) coincided with the 25% level - that is so cool to see when it happens! Anyway, the trade took little to no heat and moved very cleanly to the bullish ab=cd harmonic price objective. Once the objective was hit price quickly retreated.
Cheers all and hope it helps
You can find the slide show tutorial on Google docs here: docs.google.com
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BTC/LTC Spread - no bottom yet I'm affraidWith the recent topping action in BTC it has been interesting and a little disappointing to watch LTC's outright failure. Indeed, Litecoin's inability to hold significant support levels has both broken its bullish bias and once again brought it's relevance as #2 to BTC into question. With this relationship continuing to decouple, I thought I would take a moment today and look at the historical relationship between the two to see if the spread's relationship (and really its trend) may hint at future expectations.
Here then is a nice four hour chart of that spread (LTC/BTC) going back to last fall. Needless to say, it has been a very tough past six months for the bulls. A bear market is defined simply as lower highs and lower lows and that is basically what has transpired; especially so since the failure of the winter trading range lows at .02124. The sky's did brighten a bit through the end of May as it looked like a capitulation bottom had been formed. After a two week consolidation, bull's hearts where broken once again as we have now broken through the bottom of that range. Price has now reached the original double bottom that started the meteoric rise late last November and the bulls are left to ponder if this old significant level is 'the bottom'. Unfortunately, until we stop making new lows and start making new relative highs, I can't make the bullish case here. Indeed, with the recent failure of the top of the original double bottom (.1625) three very real downside targets present themselves.
1. Bearish BoT target .01354
2. Gap at .00913
3. 200% extension of the winter trading range failure: .00716
So what can we infer from this rather negative outlook? Here are a few of my thoughts: While attractive, there is no long trade on this spread at the moment. One could argue that bear "BoT' setups (a way to play bear ab=cd harmonic price patterns) are perfectly realistic into stated downside targets. Until we start to see a pattern of higher highs and higher lows, bulls must sit and wait.
Cheers all and hope it helps
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BTC - 4hr Stamp has broken downJust a quick update. BTC - Stamp has resolved the recent consolidation bearishly. I have been talking about the consolidation for a few days now in my videos and we have broken through support. While current prices don't seem to make sense for new trades, it is in my opinion one can realistically play short setups (day trade basis) as we work our way down to highlighted levels or just wait for a consolidation at/near those levels for new long purchase considerations.
Cheers all and hope it helps
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1hr BTCE - Well defined 38.2 Fib fail off full moon madnessThe parabolic price spike into the full moon caught me (and I would assume many others) completely off guard. The fact that there was little to no follow through supports the notion of an anomaly and the market is going through the natural process of correcting for that event. Indeed, the 1 hour chart continues to work its way lower after a well defined top/fail at the 38.2% fib (CRI's '1st stop' target). That area (near 472) appears to be a significant 'battle zone' and I wouldn't be surprised to see it tested again. Should it be recaptured, a rally back up into the Optimal Trade Entry (OTE) short zone is realistic. However, bearish harmonic patterns on the initial move through that level suggest either a test of the top of the OTE long zone (61.8%) and/or a tag of the sweet spot (ss) at 70.5% itself. Additionally, there is both the top of the old trend channel and a small uptrend line near the bottom of the OTE long zone (78.6%) so price action into this wide area shouldn't be too unexpected. I currently have orders working at those levels and now must sit patiently and wait for my fills.
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Crude Oil day trade setupHere is a really nice example of the BoT in action. Price had been basing through the overnight session as a wide double bottom was confirmed through the pre-pit open. That bottom setup long ideas and sure enough the BoT came alive when prices corrected to 103.26. I watched price action closely and was very fortunate to act when given the opportunity (wtg Brian). On news out of Russia, price surged higher and both the 'stop to break even' level and the 'stop to trail' levels where hit. Considering my poor performance yesterday, I wanted to book a nice positive day and so moved my stop up aggressively and was filled shortly thereafter. Interestingly, had I left my stop at break even through the following 10 minute pull back and then moved my stop to that pullback low (which is in my plan....tisk tisk Brian) I would have ultimately been filled at the ab=cd target. Still more to work on but am happy with booking a nice profitable trade on the day.
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USO setup for another weekly options expiryEvery Friday we have weekly options expiry and with it comes some interesting price action. If one looks at option open interest data one can glean an idea of where 'the smart money' wants the market to finish at expiration (11AM pst). Interesting here, we see the institutions have a lot of incentive (in terms of net exposure considering they write most options) to take price out above $36 but below $36.50. Additionally, one often gets a 'freebie' trade coming out of the Euro close (8:30AM pst) each of these Fridays. This short pocket of time is ripe for market manipulations and until the public catches on in earnest, i would suggest you try to take advantage of it. If interested in talking more about this market-anomaly or you have questions, please feel free to come to one of my tutorial sessions and we can talk lots about this and other setups.
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1hr BTCE - fail at top of range led to collapseSadly for those in the Bitcoin world, today was a very negative day for the cyrpto-currency. Viewers of our show last night should have left feeling the bearish tone to the current environment and indeed, that bearishness has played itself out. Technically, a rather ugly fail at the top of a well defined trend channel and a looming weekly OTE zone were two reasons alone to look lower. Consider too, the pending fundamental selling deadlines for those within China, and I suppose you could make the 'rational' case for a bearish scenario. Interestingly, those downside technical objectives have now been hit and one has to be left with a feeling of, 'is it over for now?' While our over-bought / over-sold indicator is very much 'stupid' at the moment (and really that seems to best describe price action) neither raw momentum (MACD Historgram) nor volume (OBV) have bottomed in earnest. The current 'dead-cat-bounce' has brought us back to the 13ema and the bottom of the trend channel. These two barriers may put a lid on prices for the time being. Should we test these recent lows and they hold, a move back above these recent highs might represent a 'double bottom' and if so, I shall pay close attention to what the indicators are suggesting at that point. Should a bottom come in (and we recapture the trend channel) the current OTE short sweet spot (where institutions will seriously consider shorting again) is right at a significant 'battle line' noted on the chart above.
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