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!
|
 |
Perfect Sell
BTC: Price: $11,180 | MCAP: $181.70 | Maximum Gain: +4.8%
Why we were intrigued:
Bitcoin was on the back foot on Aug. 12, having dived out a contracting triangle or a narrowing price over the weekend.
The range breakdown validated bullish exhaustion signaled by the cryptocurrency's repeated failure to close above $12,000 and confirmed a bullish-to-bearish trend change.
Further, the 5- and 10-day moving averages (MAs) produced a bearish crossover on Tuesday, further confirming an of the rally from the July 28 low of $9,111 and bearish reversal. The 14-day relative strength index also fell into the bearish territory on Tuesday.
With the technical setup looking bearish, our analyst called a bearish move on CoinDeskDojo during the European trading hours on Tuesday, when the top cryptocurrency was trading at $11,347.
As predicted, the cryptocurrency fell to the downside target of $10,800 in the U.S. trading hours and extended losses to sub-$10,000 levels on Aug. 15.
As of writing, BTC is changing hands at $10,148 on Bitstamp, having hit a low of $9,467 yesterday.
What's next?
The cryptocurrency created a classic long-tailed bullish hammer on Thursday – a sign of seller exhaustion and impending bullish reversal.
The trend change, however, would be confirmed only if prices print a UTC close above the hammer candle's high of $10,448.
Long-tailed daily candles have consistently reversed pullbacks in the recent past, as seen in the chart below. So, there is a historical case to be made for a price rise above $10,445 today. That said, widely followed technical indicators continue to call a bearish move.
All-in-all, the risk of a drop to $9,049 (July 17 low) remains as long as prices are held below that level.
The Trade
The Result
 |
|
|
|
|
 |
Catching a Falling Knife
BTC: Price: $11,080 | MCAP: $181.70 | Maximum Gain: -1.39%
Why we were intrigued:
The above long trade idea shared on CoinDeskDojo on Aug. 13 is the best example of why investors should avoid catching a falling knife or a dead cat bounce.
Bitcoin was on the defensive on Wednesday, having dived below $11,000 as expected on the preceding day and looked set to test the $10,000 mark.
While the overall outlook was bearish, the widely-followed relative strength index (RSI) was reporting oversold conditions with a below-30 print on the 4-hour chart. Further, the hourly RSI was reporting a bullish divergence (higher lows as opposed to lower lows on the price chart).
A combination of bullish divergence on the hourly chart and oversold conditions on the 4-hour chart often yields a dead-cat bounce, a temporary price rise caused by unwinding of shorts or profit taking.
Hence, on Aug. 14, an attempt was made to play a potential dead cat bounce by going long at $10,596 for a target of $11,000 with a stop loss below $10,450.
Things, however, did not materialize as expected with prices triggering the stop loss on the same day.
It is worth noting that indicators can stay oversold longer than buyers can stay solvent. This is especially true in markets with strong bullish/bearish strength.
So, it is always advisable to take trades in the direction of the primary trend (daily, weekly and monthly charts).
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. |
|
| | | | |
