Setting buy and sell targets when trading cryptocurrency assets — Ledger Cast

In this episode of Ledger Cast, Brian and Josh discuss buy and sell target setting, indicators they use, and other technical analysis tools for trading.

Welcome to Ledger Cast, hosted by me, Brian Krogsgard (@ledgerstatus on twitter), and Josh Olszewicz (@carpenoctom). Ledger Cast is a cryptocurrency trading and blockchain ecosystem podcast.

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We cover technical topics on trading, fundamental analysis and various coins, news of the week, and more. In this episode, we discuss news of the week, and our primary topic is a discussion around buy and sell targets, and how we use various indicators to pick our targets.

The information in this podcast should not be construed as investment advice, it is purely educational material and you should always do your own research before buying.

News items of the week

  • Crypto hit .5 trillion market cap
  • Pricing since Thanksgiving
  • A new ATH from bitcoin, followed by some alts running
  • Litecoin network speed compared to Bitcoin and Ethereum clogging
  • Charlie Lee on CNBC
  • Crypto Kitties, the first Ethereum dApp!?
  • SEC statement on ICOs and our thoughts on ICO mania’s drawdown.
  • We also speculate on exchanges making adjustments or trying to mature in response to possible crackdowns on coins as securities.
  • Marco Santori’s thread on the SEC announcement.
  • Josh talked to Bitcoin Cashers in real life and has thoughts.
  • We talked a bit about segwit and bitcoin scaling again. Also, discussed how we are aghast at Brian Armstrong and Coinbase’s shrugging of segwit as a priority.
  • Josh thinks Coinbase will list Bitcoin Cash for trading, not just for distribution to customers who held during the fork.

Coinbase coins since Thanksgiving, as shown by Josh

Coins discussed

Some coins mentioned in this episode (Check out OnChainFX for information on all of these):

  • Bitcoin: consolidating at ATH levels.
  • Ethereum: huge move off USD ascending triangle.
  • Litecoin: huge move beyond all boundaries that make sense to Josh. He did an article on it at Brave New Coin.
  • Dragon Chain ICO and attachment to Disney.
  • Vertcoin: Still on target for us for the weekly Ichimoku edge to edge trade (see my article with that chart).
  • Tezos and the drama around their ICO.
  • Bitcoin Cash and trying to be Bitcoin. A non-starter for Brian to trade or chart it.
  • Doge and market cycles
  • DEX (Decentralized exchange coins): Project 0x, Heat, Waves, Bitshares, Counterparty
  • Anonymous transaction / privacy coins: Monero, Zcash, Pivx, Zcoin, Dash

Target, Sir? (Primary topic on picking buy and sell targets)

If you skip to minute 33, we start talking about technical analysis and how we choose buy or sell targets.

Pattern analysis

Generally, Josh trades using pattern analysis (his video on this). An example we used for pattern analysis is Ethereum’s multi-month ascending triangle on the high timeframe, and a flag on the lower timeframe. The measured move of this triangle was around $800, which was already achieved.

Multi-month Ethereum triangle with flagpole and equivalent measured move (green bars)

Bollinger Bands

Triggers are used in addition to pattern analysis. In the case of the Ethereum consolidation, Bolinger bands (video) could provide insight to measure volatility. As the bands tighten, the likelihood of a volatile move increases. In conjunction with the pattern, it allows you to predict possible price action.

Bollinger Bands tightening and breakout

Ichimoku Cloud

The Ichimoku cloud gives us a visual snapshot of the trend, with a lot of information. Again using our Ethereum example, the Ichimoku cloud versus the dollar was signaling bullishness prior to the ascending triangle breakout.

Ichimoku bullishness and bounce of daily cloud

An entry on this example could’ve been made at several levels:

  • An agressive entry on the bottom diagonal of the triangle
  • Buy the breakout of the Bollinger bands, or the triangle
  • Buy the retest of the triangle top

Comparing USD versus BTC pricing

We can spend more time on this, but this example shows a Ethereum price comparison versus the dollar. However, the bitcoin relative price is also important. Josh and I both wish to have more bitcoin, so if Ethereum isn’t outpacing Bitcoin, then it’s better to hold Bitcoin.

So the ideal here is to let Ethereum consolidate as much as possible while not in, and buy as the biggest portion of the move is about to happen, so that it can outpace Bitcoin’s bullishness.

You can see that ETH/BTC isn’t near as attactive as ETH/USD throughout the majority of the time period

Getting this exactly right could be very difficult. However, both of us think it is worth looking at both the USD and BTC pairs for coins. When the charts align, it presents the most opportunity.

Market cycles

Market cycles are one of the most important considerations when buying alt coins. Josh gave the example of Doge and how it has these huge pumps relative to Bitcoin. Here’s an example of Doge versus Bitcoin.

Doge/BTC and the possible buy zone

Doge/Dollar with fib extensions

Note how the Doge/BTC chart is drastically different than the one versus the dollar. Despite Doge versus the dollar being near an all time high, it has failed to keep pace with Bitcoin. Yet, the bitcoin pair is now in the buy zone again, and therefore may present another market cycle opportunity, and a move in the Doge dollar price.

Double bottoms / Adam & Eves everywhere

Right now in alt coins, there are a lot of double bottoms, which are often presented as an Adam and Eve pattern where it’s a V and a U side by side, where the U is often a higher low than the V.

Adam & Eve like we currently see on many bitcoin pairs

When buying an Adam and Eve, you often see a retest of the pattern break, like you see above. Targets can be the distance of the orange line (middle of two peaks) to the lowest low.

Thomas Bulkowski also notes more identification and success metrics for this pattern.

Many more patterns

We spoke of some patterns but there are many, many more. Josh’s playlist on indicators is very good.

There are many ways to trade. We talked about how we tend to do things here, but there are many strategies. Another many crypto traders love is a method of bottom calling, where they try to “catch knives” if you will, and work to catch alt coins at their depths, rather than on trend confirmation.

Selling partials

One thing we both do is trade in ranges. It’s going to be hard to call an exact top, so when we are selling, we both try to establish a range of possible prices where we sell. For instance, if we want to see .04 btc to sell, maybe we set sells between .035 and .06 depending on how those prices work within various indicators: moving averages, fibonacci extensions, cloud levels, or whatever else.

More in the podcast

I’ve tried to recap some of what we discussed, but we went into more depth in the show, be sure to listen!

Various other links

  • Binance for alts trading
  • Gdax (Same company as Coinbase, better for frequent traders) for Bitcoin, Ethereum, and Litecoin
  • Altcoin.io for an alts DEX using atomic swaps
  • Bitcoin Tax website for calculating taxes. I have an article coming on this as well in more detail.
  • Josh’s “Top 5” lists for 2018 where he talks about alts to watch, traders, tools, and more.

Listener questions

We answered the following questions!

Ask us a question

Every episode, we’ll try to answer one or two audience questions. If you ever have one, just tweet at us or fill out the contact form.

Coin of the week

Josh: Doge. He’s looking at it for market cycle reason (see charts above).

Brian: Waves. I’ve enjoyed the btc chart, as it just broke out of a long term descending triangle, and it’s in an ATH price discovery mode versus the dollar. They’ve also been putting out a lot of news.

Find Josh and Brian elsewhere

Interested in sponsoring?

We’d love to talk to interested parties about sponsorship opportunities. We are open to suggestions, but are not seeking deals that include promos for ICOs, etc. But if you do something interesting in the space and want to chat, contact us.

Music: “Oh, the chains” by Joel Madison Blount