The media hype surrounding crypto currencies since last summer and particularly before Christmas with the parabolic upward prices, brought many people flocking to trade the crypto markets. Most of these newcomers had never even traded before, but rushed in because of FOMO. They started buying without having any experience or having any plan. With the recent falling prices, then the short retrace and now prices falling again, many of these latecomers are now like rabbits caught in the headlights. They don't know which way to turn, and nobody can advise, because nobody knows what will happen next in these new markets. We have never been here before. I've written about this paradigm shift in a previous post and it may be of interest to you.
Fundemental trading
I am a pure technical trader, meaning I trade from the price action I see on the charts, as it represents the sentiment in the markets. When I am speculating in the crypto markets for HODLing purposes, I don't look at the charts for a reason to buy. Instead I look into the fundamentals behind the token I'm interested in, and I only then look at the chart for a buy level. The chart only gives me the entry and not the reason.
Technical Trading
As a technical trader, all you need is a chart of the instrument. You do not even need to know the name of the instrument you are trading. You are trading the price chart, not the instrument. It doesn't matter if it is oil, gold, dollar, bitcoin, orange juice, coffee beans or baked beans, price is price.
If you look at the chart below, you will see that I have removed the name of the instrument. It doesn't matter what instrument this chart relates to, as I am just trading the price action.
Follow the leader
Below is a chart of BTC/USD, and you will notice that the supply level is still holding. Most other crypto charts are looking similar in formation, because bitcoin is the market leader, and we need this supply to break for further upside.
However, the first chart I posted above is actually of Litecoin and it is plain to see that it is bucking the trend. It is bouncing of demand below rather that reacting of supply above, as the other coins are doing. Now I know that there has been much good news for Litcoin lately and probably is the reason for it's divergence form the crypto markets as a whole, but it is often said "to buy the rumor and sell the news". While I can use the news for HODLing purposes, as a technical trader I must ignore these outside influences and just trade what I see on the chart.
Consider this
If the overall markets now turn bullish to follow Litecoin to the upside, it could mean we have a new market leader emerging. This is far from proven yet and we must wait for the charts to tell us. I am still in the hurry up and wait mode and I will continue to just trade forex for now.
Disclaimer
I am not responsible for any losses you may incur as a result of acting on any of the content contained in this article. I make no recommendations to buy or sell, and this post is purely for information and education purposes. Opinions expressed here are my own, and you should seek advice from a financial adviser.