Altcoin Update — QUIT CHASING THE HEADLINES!

I’m going to provide a quick update here on some of the Altcoins we currently hold and trade around in our portfolio.

ETHEREUM (ETH)

I did an update on Bitcoin in another post, but here we have Ethereum versus Bitcoin.

I know they both trade in the same general direction but they’re also kind of like the Euro versus the Pound, which also usually trade together in the same direction, but that’s not always the case. When you pair the two off each other, consider looking for a dip as a possible place where you want to be thinking long Ethereum more-so than long Bitcoin.

In the chart below we can see an example of a downtrend channel going on with Ethereum versus Bitcoin. When you have something like this, anytime you get to the bottom of the range you can look to Etherium to get more aggressive, and when you get to the top of the range it’s probably telling you that you should be taking Etherium off, or maybe Bitcoin is underperforming, so look to rotate. It’s the same kind of thing you do when you’re trading any spread product — we used to do that a lot in Treasuries — you would look at the two. As an example, even though the five-year and the two-year might move in the same direction, sometimes one will move up more versus the other one, occasionally they’ll move in opposite directions, etc, but I don’t want to get too much into that.

Looking at Ethereum vs the US dollar now, we can see from the chart below that it’s had a good run lately. If you are waiting on the headlines to tell you Ethereum is up, or you’re waiting to buy today, I’ll be honest and tell you that your timing is off and it’s the wrong action — you’re doing the complete opposite of what you should be doing. We want to be taking profits into the headlines like this.

You can see where our last buy was on Ethereum and I haven’t even taken any off yet. There are lots of reasons for that and I’ve made several comments about the bullish price action in previous updates. Price stopped making lower highs and really turned bullish when it got back above the green Wave Formation Bands with a Real Money Candle recently. Up at these levels here you want to be taking a little bit off the table considering price has moved up nicely, as indicated with the green arrow.

We could encounter a little resistance from the previous minor high, but everyone will pretty much focus on the most recent major high, well above $400. There’s no reason why Etherium can’t target the $420 area again and I would expect to see a test there. So you want to take profit into that high and then see what happens next. If price gets through there you can always re-buy again but if it gets up there, tests, and fails, then you want to take advantage of the present moment and take some profit. If you don’t take profit and then the market collapses back down to say $300, you will have wasted all this time and wasted the opportunity to sell at a good level — and now the market would be back down to where it was 2 weeks ago –that’s the problem with buy-and-hold. Better to take some off; you don’t have to exit completely — if price gets through the high you can always re-buy and re-establish your position. That’s the better way to trade it and it gives you a win-win scenario. That way if price fails up there, you’ve taken some profits. If it pulls back, you can get back in again, and now you’re taking full advantage of the situation.

BASIC ATTENTION TOKEN (BAT)

We’ve been trading this one around because it’s had a nice ebb and flow lately. We’ve been buying on some of the most recent dips and we’ve taken some profits after it’s been up about 10% today. When it’s down 10–15% we buy some back and when BAT rallies we take some off. The chart below shows what I am referring to.

There were a couple of other dips we could have been buying and some other cycle highs we could have used to take some profits, but that is the concept of trading around a core position. We had a very good sale on our last trade and if price gets back down to the levels where we bought last time then we will simply put that piece back on.

MONERO (XMR)

Similar to BAT, we’ve done quite a bit of trading in Monero lately as well as we trade around a core position. I like the action of buying, taking some off, then buying some back, and taking some more off. You can see this better on the 30 minute chart below.

Even if price keeps falling back I’m going to keep nibbling and then when we get one of the eight setups that we like in our trading model, we will jump all over it.

Looking at the 4 Hour chart, I’m eyeing the area of support between 0.024 and 0.026 as an area to buy back into, with the cycle low again.

NEO

We’ve also made some moves on Neo lately. Everybody has been concerned about the China news but those types of headlines are going to be there consistently — even in the forex markets. They want to try to control the capital flight; that’s just how the Chinese government is, but if you’re chasing the headlines here then you are worried on the most recent dip. This is a pullback within an uptrend so I’m a buyer. We got that flush down so we bought, and I bought again on the deeper dip. Even if price pulls back to our Pi line, that would be a gift and we would be buyers again there.

It’s tough to read into the headlines — will all ICOs be affected going forward? Will completed ICOs that are already trading now be suspended? I just don’t think that it will be that easy to regulate the space when it’s not that regulated to begin with, so we’ll see. That’s why I don’t put everything in one basket. We will continue to trade the model as is and use those headlines to our advantage, so I’ll be looking to buy Neo back down towards Pi, below 0.0060.

Here is an updated breakdown of value in each currency based on USD. We are still diversifying more every day.

A little about me now…

Before joining CG Capital, I spent almost a decade trading US Treasuries and building out a successful institutional analysis and fixed income trading business. I have covered all the primary dealers, large buy-side money managers and hedge funds. My financial career began at Charles Schwab as a trader in the equity and options markets before moving to the sell-side to trade fixed income at vFinance, JVB Financial, and CG Capital.

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