How REN/BTC Double Bottom Made Me 49% Profit

On this third installment of my Bitcoin Value Diary, I’ll revisit some open positions that are nonetheless in play and evaluation a large commerce on REN. I even have a place in Bitcoin (BTC) that’s nonetheless largely open. 

As I’ve mentioned a lot of instances on Twitter, I consider that it has been an altcoin season for months and that altcoins discovered their native bottoms in August. I’ve been comfortably buying and selling them since. In early October, Bitcoin dropped and was ranging sideways, giving altcoins much more room to understand. 

On the time of writing, Bitcoin value is a number of days faraway from a large 6.6% transfer up, which precipitated a drop throughout the board on many altcoins. I’m continuing with warning on altcoins for the second till Bitcoin has supplied clearer path for its subsequent transfer. 

I desire to maintain my lively trades at a minimal as a result of it helps me handle my threat. Opening a number of altcoin positions on the similar time not often works for me as they transfer in tandem based mostly on Bitcoin value strikes. 

This is the reason I assign a 1% threat for a number of positions as failing to do that can result in sizable loss throughout the board. I desire to determine the 1 or 2 setups I like one of the best and allocate extra funds to heavier positions. On this case, I deployed the majority of my buying and selling capital right into a REN place, which labored out superbly.

Let’s check out some charts to see how the method labored out. 

REN/BTC: Establishing the commerce

Entries: .00000512 (sats), .00000601 (sats)

Targets: The goal of the preliminary breakout, for me, is a visit to the all-time excessive. That is formidable, however my first goal for a small portion of the commerce was set at .00001396 (sats). This is able to be a 170% acquire.

On the time of entry, I used to be awaiting a possible double backside (confirmed with a break of .00000601), with a goal round .00000840. This is able to be a 64% acquire from the primary entry and a 40% acquire from the second entry. 

Cease loss: In case the commerce goes stomach up I’ve positioned a cease loss at .00000476 (sats), which equates to a 7% loss on the commerce. 

Calculating the risk-reward ratio

It’s additionally good follow to think about the danger to reward ratio when investing, particularly with altcoins given Bitcoin’s present dominance charge. 

The chance to reward ratio measures the distinction between a commerce’s entry level all the way in which to the stop-loss and promote or take-profit order. 

Evaluating these two supplies the ratio of revenue to loss, or reward to threat. For this commerce, it’s roughly 26 (!!!)  on the first goal and 9.6 on the second goal.

Normal evaluation

REN has been in a transparent and sustained downtrend since hitting its all-time excessive in July. I caught many of the transfer up and was in a position to revenue, exiting close to the highest. I had little or no curiosity in buying and selling it once more, and constantly posted on twitter why I seen extra draw back as possible.

As beforehand talked about on twitter I consider the down transfer started with a head and shoulders and every day bear div. 

Value finally fell effectively beneath this space into the .00000360 zone.REN/BTC Four-hour chart. Supply: TradingView

I clearly focused the low zero.000005 space, as might be seen by my constant posting concerning the inexperienced weekly demand zone on my previous charts.

REN/BTC daily chart

REN/BTC every day chart. Supply: TradingView

Entry concepts

The white descending line on the every day chart was my fundamental space of curiosity for an entry. I seen this as a transparent break of the sustained downtrend. REN/BTC value broke via this line on Oct. 5, the place I entered my first commerce on the breakout at .00000512 sats. 

REN/BTC daily chart

REN/BTC every day chart. Supply: TradingView

Beforehand, REN value bounced out of a powerful demand space (seen on the chart beneath) on the every day chart, fashioned above the all-time low of .00000309 on Binance. 

The transfer up from there caught my consideration, and could be seen as a possible entry for merchants with the next threat profile. I used to be nonetheless not keen on buying and selling the coin with out affirmation of a reversal to the upside — a break of the descending line. 

REN/BTC daily chart

REN/BTC every day chart. Supply: TradingView

Value additionally fashioned a possible double backside at .00000388 sats, which gave me one other space of curiosity for an entry. 

A double backside is confirmed when the neckline (the very best swing level between the 2 bottoms) is damaged. I like buying and selling a retest of this line, so I added to my place at .00000601 sats. 

REN/BTC daily chart

REN/BTC every day chart. Supply: TradingView

REN/BTC daily chart

REN/BTC every day chart. Supply: TradingView

How it labored out

I exited early on 75% of the place at .00000764 sats, for a revenue of 49% on the primary entry and 27% on the second entry. 

Why did I exit early? There are a number of causes. 

Bitcoin made a large transfer to the upside, inflicting a drop in most altcoins. I consider there may be extra upside finally in retailer for Bitcoin, so this might trigger additional value depreciation in REN/BTC. 

Extra importantly, I recognized a transparent bearish divergence on the Relative Power Index (RSI) on the Four-hour chart, with RSI overbought. A majority of the time, this alerts an area high, if not an finish to the whole transfer up. 

REN/BTC daily chart

REN/BTC every day chart. Supply: TradingView

I’ve moved up the cease loss on the remainder of my place to only beneath the pink line at .00000684 sats. There’s a potential hidden bullish divergence forming, which might be invalidated at that time. Additional, that line is a transparent space of help that bulls want to see maintain. 

REN/BTC 4 hour chart

REN/BTC Four hour chart. Supply: TradingView

BTC/USD

I took a swing place in Bitcoin, i.e. BTC/USD (XBT/USD) on Sept. 26 at $7,914, re-entering the market with a big chunk of the fiat that I had on the sideline. The premise for the commerce was that I noticed a pleasant Four-hour candle with a big wick down, which made a transparent descending channel. 

This candle was shaping as much as be a pleasant reversal. Mixed with the descending channel and the numerous bullish divergence with the RSI, I used to be assured that value would rise. The RSI was traditionally low on the primary drop, hitting Four.38. A bounce was considerably inevitable. 

XBT/USD 4 hour chart

XBT/USD Four hour chart. Supply: TradingView

Bitcoin value made a transfer above the equilibrium (dashed centerline) of that channel, and broke out, bullishly retesting resistance as help. 

XBT/USD 4 hour chart

XBT/USD Four hour chart. Supply: TradingView

Though value dropped as soon as extra, I didn’t exit the commerce, as a result of I noticed one other bullish divergence with RSI forming on the every day chart. 

BTC/USD daily chart

BTC/USD every day chart. Supply: TradingView

This led to the massive transfer up from round $7,700 to over $eight,500. I exited 50% of the commerce at $eight,625, and am nonetheless holding the rest of the place as value confirmed a triple backside on the Four-hour chart when it broke $eight,535 — the swing excessive between the three bottoms. It efficiently retested this space, so additional value appreciation is probably going. I’ll maintain you up to date!

BTC/USD 4 hour chart

BTC/USD Four hour chart. Supply: TradingView

The views and opinions expressed listed here are solely these of the (@scottmelker) and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer entails threat. You must conduct your personal analysis when making a call.

Market information is supplied by HitBTC trade.

About Tom Greenly

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