This post is a bit experimental with a concept I am still developing. Looking for feedback on if it is insanely foolish or inspired.
We had a slight correction from our most recent upswing and things are looking more like they are ready for take off. I was looking at the charts and am always pleased when I am going long to see the lows of the MACD and RSI experiencing higher lows with the price (just like when I am shorting I like to he the MACD/RSI and prices having lower highs).
One difficulty of working with crypto with its x10 yearly movements combined with its 70-90% retracements that indicators that are not range bound (like the MACD) get harder to use over time. So as an experiment I have been switching the scale on the MACD to logarithmic to see what I can see when it comes to entries and exits for long positions (I am in long mode now so maybe in 6-9 months I will look again at short entry points).
The yellow boxes on the Log-MACD chart are when the MACD goes vertically up and are within a few days followed by the signal line. The green boxes are when the MACD drops vertically, followed by the signal. With the first set of yellow and green boxes we see the histogram actually moved first and except for two bars in the middle, stayed down. A look at the normal MACD chart shows the MACD was rising from below zero and peaked in the air before coming down. If you used the RSI bounce and yellow box for entry and the green box Log MACD to signal your exist you would be in 90% gains.
The second yellow box begins the great bull run of 2017. Once again the log MACD is surging to vertical and the normal MACD trends up without a significant dip till mid November. Twice the histogram turns negative for less than a week but the Log-MACD stays running high. It does not go vertically down until the dip in January. If you had used the green second yellow and green box pairing you would be up about 270% with no leverage.
The blue box doesn't fit the pattern because the Log MACD spikes and the signal does not. Further, the MACD does not run across the top. Since this is the only time we see this I would speculate that spike suggest a bull trap and if it ever comes up again be very wary and use tight stops or not trade.
The third pair of yellow and green boxes gets you 30% without any leverage. Just a bit of speculation here, but the first two yellow boxes occurred shortly after the RSI went deep into overbought conditions and then smacked into oversold conditions rather quickly (the first yellow box occurred with an RSI of 30.something so I am calling that a mulligan). The third yellow box didn't have the same RSI oscillation.
Today the Log MACD has the histogram on the upside and the and the normal MACD is clearly making higher lows. We just had another RSI bounce off oversold and we are trending upward. For those traders (I am a currency speculator at this point, but trader sounds more polite) that like to trade continuation patterns, we would look to enter with a yellow box set up and avoid a blue box set up. The Log histogram has surged, shortly the Log MACD should go vertical, shortly followed by the Log-signal line.
This experimental look at the Log-MACD does not help you time top and bottoms but as I mentioned, is for continuation. I already did a post a few days ago about bullish divergence predicting a higher low and signaling a bull market set up (we still need a higher high for confirmation) but I think we will see a higher high with a yellow box set up here in a few days. IF we see a blue box set up I would be worried about the future of the bull run. If we see a condition that does not match blue or yellow I would be worried about the bull run.
The green boxes primarily help you either avoid losses or get you out when the market it moving sideways. If you want your money to always be doing something sideways markets can be particularly annoying because sometimes they go down.
We had a slight correction from our most recent upswing and things are looking more like they are ready for take off. I was looking at the charts and am always pleased when I am going long to see the lows of the MACD and RSI experiencing higher lows with the price (just like when I am shorting I like to he the MACD/RSI and prices having lower highs).
One difficulty of working with crypto with its x10 yearly movements combined with its 70-90% retracements that indicators that are not range bound (like the MACD) get harder to use over time. So as an experiment I have been switching the scale on the MACD to logarithmic to see what I can see when it comes to entries and exits for long positions (I am in long mode now so maybe in 6-9 months I will look again at short entry points).
The yellow boxes on the Log-MACD chart are when the MACD goes vertically up and are within a few days followed by the signal line. The green boxes are when the MACD drops vertically, followed by the signal. With the first set of yellow and green boxes we see the histogram actually moved first and except for two bars in the middle, stayed down. A look at the normal MACD chart shows the MACD was rising from below zero and peaked in the air before coming down. If you used the RSI bounce and yellow box for entry and the green box Log MACD to signal your exist you would be in 90% gains.
The second yellow box begins the great bull run of 2017. Once again the log MACD is surging to vertical and the normal MACD trends up without a significant dip till mid November. Twice the histogram turns negative for less than a week but the Log-MACD stays running high. It does not go vertically down until the dip in January. If you had used the green second yellow and green box pairing you would be up about 270% with no leverage.
The blue box doesn't fit the pattern because the Log MACD spikes and the signal does not. Further, the MACD does not run across the top. Since this is the only time we see this I would speculate that spike suggest a bull trap and if it ever comes up again be very wary and use tight stops or not trade.
The third pair of yellow and green boxes gets you 30% without any leverage. Just a bit of speculation here, but the first two yellow boxes occurred shortly after the RSI went deep into overbought conditions and then smacked into oversold conditions rather quickly (the first yellow box occurred with an RSI of 30.something so I am calling that a mulligan). The third yellow box didn't have the same RSI oscillation.
Today the Log MACD has the histogram on the upside and the and the normal MACD is clearly making higher lows. We just had another RSI bounce off oversold and we are trending upward. For those traders (I am a currency speculator at this point, but trader sounds more polite) that like to trade continuation patterns, we would look to enter with a yellow box set up and avoid a blue box set up. The Log histogram has surged, shortly the Log MACD should go vertical, shortly followed by the Log-signal line.
This experimental look at the Log-MACD does not help you time top and bottoms but as I mentioned, is for continuation. I already did a post a few days ago about bullish divergence predicting a higher low and signaling a bull market set up (we still need a higher high for confirmation) but I think we will see a higher high with a yellow box set up here in a few days. IF we see a blue box set up I would be worried about the future of the bull run. If we see a condition that does not match blue or yellow I would be worried about the bull run.
The green boxes primarily help you either avoid losses or get you out when the market it moving sideways. If you want your money to always be doing something sideways markets can be particularly annoying because sometimes they go down.
And I promise every Floridian that you will all be rich... because we're gonna print some more money! Why didn't anybody ever think of this before?
~Nathan Explosion
~Nathan Explosion