Welcome to the weekly edition of the CoinDesk Markets newsletter!
Every Friday we will review our cryptocurrency price predictions posted during the week via CoinDesk Markets Twitter or our private room on StockTwits, the CoinDesk Dojo.
"Trades You Missed" will feature our favorite trade ideas or technical analysis insights that accomplished impressive gains, where as "Trades We Missed" will feature those that took a turn for the worse.
Wins and losses are both part of the trading game, so we hope you will learn how to replicate our successes and minimize losses!
|
 |
Trading The Oversold Bounce
ANKR/BTC: Price: 48 BTC | MCAP: 1,187 BTC | Maximum Gain: 22%
Why we were intrigued:
The sell-off in the lesser-known cryptocurrency ANKR, currently ranked 229 as per market capitalization on CoinMarketCap, was looking overstretched on Aug. 7.
On that day, the 14-day relative strength index (RSI) was hovering at 23.98, the lowest level since June 26. A reading below 30 is considered a sign of oversold conditions, that is, a temporary weakening of bearish momentum.
An oversold reading often leads to a dead cat bounce – a temporary recovery in prices after a substantial fall, caused by speculators buying in order to cover their positions.
A trader can pick up a dead cat bounce by studying intraday charts in conjunction with the daily and other long duration indicators. A bounce is usually seen once the daily and intraday charts begin reporting extreme oversold conditions.
In ANKR's case, an oversold reading on the 14-day RSI on Aug. 7 was accompanied by a bullish divergence of the RSI on the hourly chart. A bullish divergence occurs when the indicator charts higher lows, contradicting the lower lows on price and indicates weakening of bearish momentum.
So, a buy call on ANKR/BTC was initiated on Aug. 7 when the price was trading at 49 sats. The cryptocurrency hit the first target of 60 sats on the following day before falling back below $50 today.
Traders may feel tempted to buy again at the current price of 48 sats. However, that could prove costly, as there are no signs of bullish divergence on intraday charts. Also, the 14-day RSI is now holding well above the recent low of 23.98.
So, the probability of ANKR printing fresh record lows below 47 sats is high.
The Trade
The Result
|
|
|
|
|
 |
Bitcoin in Tug of War Between Bulls and Bears
BTC/USD: Price: $11,740 | MCAP: $209.91 billion | Maximum Loss: - 1.32%
Why we were intrigued:
Bitcoin crossed above $12,000 in the early U.S. trading hours on Aug. 7, confirming a bull flag breakout on the 15-minute chart.
A bull flag is a continuation pattern, which often accelerates the preceding price rise. Put simply, it is a pause that refreshes higher.
So, on Aug. 7, the cryptocurrency was looking poised for a move higher to $11,500 (target as per the measured height method). The bullish development was backed by a sharp rise in buying volumes on the hourly chart.
BTC, however, had other plans in store. The cryptocurrency clocked a high of $12,145 immediately following the flag breakout before triggering the stop loss of $11,900. The bullish trade was shared on CoinDeskDojo when the cryptocurrency was trading at $12,060.
What's next?
Bitcoin's daily chart shows a “double inside bar pattern” – yesterday’s doji falls within Wednesday’s high and low and Wednesday’s candle is engulfed by Tuesday’s high and low.
Double inside bars indicate consolidation and lack of volatility and the pattern often paves the way for an explosive move on either side.
As per technical analysis theory, a break above the high of the first inside bar is considered a sign of bullish breakout and a move below the low of the first inside bar’s low is taken as a bearish reversal signal.
So, looking forward, the focus is on Wednesday’s high and low of $12,145 and $11,388.
A UTC close above $12,145 would signal a resumption of the rally from recent lows near $9,100 and open the doors to the bearish lower high of $13,200 created on July 10.
A UTC close below $11,388 would confirm the bearish reversal and shift risk in favor of a drop to $9,057 (July 17 low).
Read: Bitcoin in Tug of War Between Bulls and Bears as Trading Range Tightens
The Trade
 The Result
 |
|
|
|
|
|  We're excited to announce the launch of the CoinDesk Dojo, a premium subscription part of StockTwits' recently announced Premium Rooms product. Ask the analysts—Omkar, Sam and Seb—questions about charts and talk with other traders looking to profit off the volatility of the crypto markets. Create an account on StockTwits and then subscribe! Subscribe Here |
|
| Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
|
| | | | |
Breakout Elusive