How to Gain Value From my Price Analysis Articles (Monero Example)
This Monero price analysis is a really good example of why I think the price analysis articles that I put up are worth reading:
This article isn’t just about being right, it’s about strategizing your entries and exits when you take positions in coins.
“What Do You Mean?”
- In the article, I showed the trendline that you see in the default picture for the post.
- My default position on here was that you should not enter in a position just yet and that this was a trade that needed to be monitored. There are some trades that are like that. Sometimes it’s best to wait for some more price action to play out in a trade before pulling the trigger on it. This can save you a lot in terms of avoiding unnecessary losses or buying a bag that ties up your funds for a longer period of time than what you want.
- The strategy for the Monero price analysis was to **wait until the price broke below the trendline. If that did happen, you begin to take out a mean short. Of course, you have to plot for yourself, when you should exit the short (I’m not that clairvoyant).
- I also recommended that you place a long position if the price exceeded $108 (to be super safe about it), because I knew that the price busting past that point would mean that there were probably a decent amount of gains to still be had.
- I pointed out the uptrend in the RSI (higher lows), to show that there was an overall bias toward bullishness in the not-so-distant future. However, I was also careful to mention that this chart is on the 2H time frame, so the ‘not-so-distant future’ did not mean in a week or two. I believe that this was also included in there.
For all of the reasons that were stated above, I did not advocate for a certain position to be taken on this coin, but rather for you to wait and play it out whether it broke above or below.
Trading on Trendlines
I’m never really a fan of trading directly on a trendline unless there are some other super taletell signs like what we saw with Bitcoin when it had an exhausted RSI and the price was nudging against the resistance point for a while.
Looking at this photo, you could tell that the price of Bitcoin was going to turn down because the RSI was beginning to wane as the price continuously traded against the $7.5k resistance, unsuccessfully breaking it.
Another major clue was not wicks breaking up to the north.
Whenever you see something like this on a chart and you’re wondering to yourself,
Will the price break upward or downward?
A telltale sign can be found in the wick formations.
As you can see in the picture, there were barely any wicks that really broke above that $6.5k point.
However, there were a lot of long wicks sticking out of the bottom. That shows bear pressure.
This + exhausted RSI on the lower TFs is what caused me to say the price is going down .
I predicted that it would most likely just hit the $6.2k point because the RSI on the daily chart wasn’t grossly overbought or anything. It’s been making its way with some good momentum if you check it out (RSI(14)).
However, the lower TFs (H4 and below), were overbought. So, it seemed like the price needed to ‘cool off’ for a bit before making its way back up.
Even despite being right on that call, I probably would have said that a responsible trader shouldn’t have taken a position on that play unless you’re naturally that aggressive.
The reason why I say this is because $6.5k-$6.2k = $300; $300/$6.5k = +4.6%.
So, the maximum upside of (my predicted) move (before it happened) was +4.6%. Given Bitcoin’s volatility and semi-unpredictability to move upward at random and in one fell swoop / volatile move, there’s a chance that placing a tight S/L won’t be sufficient because the price will move up too quickly and you’ll just simply be stuck with a $6.5k bag if the price were to raise suddenly (hypothetically).
I’m just a risk averse individual, and that’s the type of trading that I advocate — especially in these volatile markets.
Protect yourself, hedge yourself, and be humble about the gains you’re trying to get in this market and the market will treat you well.