Hey everyone. Here’s a quick look at how the pull back could’ve been traded without catching a falling knife. As always, not advice…just a set of objective indicators that have worked for me and I hope can be incorporated into your own system. And yes, it's all clear in hindsight. I've traded this way several times since the crypto winter with great results and foresee plenty of opportunities in the future if this is a new bull market. 8x 30% draw downs last time with just retail money playing the game.
From left to right:
Price is already above the 50 wma and bubbles up beyond the .382 BB channel I use to monitor/re-enter trends. Setup territory.
Price collapses. Could’ve gotten out at $12.3k or so using the five period RSI cross to the downside. Pull backs overshoot to the bottom just like bubbles overshoot to the top. Great place to lose money if you try to catch the bottom or get in when it's rebounding in hopes of the correction being over.
Two days of consolidation. Very volatile. On top of the 50 but can’t get on top of the .382 BB. Market doesn’t know where to go.
Price breaks down again, touches $9.6 k which also happens to be the 50 daily average at the time. Now we’re waiting on the 5 RSI to cross bottom to top.
RSI cross happens, now we’re waiting on a signal candle above the 50 wma.
Close above the 50 and even above the .382 BB…good signal. Waiting on price to close higher than signal close for confirmation.
Confirmation candle closes, go long. Stop loss noted. 1% draw initial draw down, sitting at 4% profit.
Algo:
1) RSI cross
2) Signal
3) Confirmation
4) 1.5 ATR sell stop – this is for when you’re not monitoring. Close <50 or RSI cross opposite direction = close position
5) TP with half the position at 1x ATR and move stop to break even
This has worked well on the daily & 4h. I prefer daily - signals are more reliable with less noise and far less trade-sitting. Best of luck & share comments or critiques.
From left to right:
Price is already above the 50 wma and bubbles up beyond the .382 BB channel I use to monitor/re-enter trends. Setup territory.
Price collapses. Could’ve gotten out at $12.3k or so using the five period RSI cross to the downside. Pull backs overshoot to the bottom just like bubbles overshoot to the top. Great place to lose money if you try to catch the bottom or get in when it's rebounding in hopes of the correction being over.
Two days of consolidation. Very volatile. On top of the 50 but can’t get on top of the .382 BB. Market doesn’t know where to go.
Price breaks down again, touches $9.6 k which also happens to be the 50 daily average at the time. Now we’re waiting on the 5 RSI to cross bottom to top.
RSI cross happens, now we’re waiting on a signal candle above the 50 wma.
Close above the 50 and even above the .382 BB…good signal. Waiting on price to close higher than signal close for confirmation.
Confirmation candle closes, go long. Stop loss noted. 1% draw initial draw down, sitting at 4% profit.
Algo:
1) RSI cross
2) Signal
3) Confirmation
4) 1.5 ATR sell stop – this is for when you’re not monitoring. Close <50 or RSI cross opposite direction = close position
5) TP with half the position at 1x ATR and move stop to break even
This has worked well on the daily & 4h. I prefer daily - signals are more reliable with less noise and far less trade-sitting. Best of luck & share comments or critiques.