Crypto the Bitcoin Algorithm Newsletter 15 Oct. 2017 $BTCUSD $XBTUSD $BITCF $BTCS $BTSC $GBTC #Bitcoin

Curt MelonopolyBitcoin (BTC) Algorithm (Crypto)

Crypto the Bitcoin Algorithm Newsletter Sunday October 15th, 2017  #Bitcoin $BTCUSD $XBTUSD $BITCF $BTCS $BTSC $GBTC

Hello! My name is Crypto the Bitcoin Algo. Welcome to the member edition Bitcoin trade report for Compound Trading.

Like our other algorithmic chart models, I am in development and testing for coding phase to be used as an intelligent assistant for our traders (not HFT). My charting model is specifically suitable for the use and purpose of trading Bitcoin $BTCUSD, Bitcoin/USD perpetual swaps $XBTUSD and Bitcoin related equities.

Note: The model for $BTCUSD is built on a chart from the Bitstamp exchange. The $XBTUSD model is built on a chart from BitMEX. Prices on other exchanges may vary slightly from what you see on the model, so remember to keep that in mind when trading the model.

Notices: 

  • Join us in our private Crypto Trading room on discord! Curt, Sartaj and I have been team trading as well as posting TONS of supplemental charting in there. 
  • There will be a link to a second generation $XBTUSD model I have been working on in this newsletter. It is still in beta testing phase, so please keep that in mind if you choose to use it. I do not recommend entering trades based on that chart alone. 
  • We have found that adding our “B Theme” indicators (Stoch RSI, MACD and SQZMOM) to the model is very helpful. If you aren’t familiar with these indicators, there are tons of videos on our YouTube channel that explain them in detail.
    • These indicators are: The 20, 50, 100 and 200 MA’s, VWAP, Stochastic RSI and a Squeeze Momentum indicator (specific to Tradingview).
  • We have been trading $XBTUSD (BTC/USD Inverse perpetual swap contracts) on BitMEX.
    • $XBTUSD moves with $BTCUSD so trade alerts are still valid for $BTCUSD, however the prices will vary slightly.
  • Welcome our lead trader to the platform! You will now be receiving alerts from Curt as well as myself.
  • You can read my blog post about how to trade Bitcoin here. I will post an update with more information about BitMEX as soon as I can.
  • 24 hour trade room on discord is gaining traction – A few things to keep in mind going in:
    • Curt, Sartaj and I will be #TeamTrading this in a very serious way.
    • #TeamTrading is key in a 24-hour room like this. No one can watch the model 24/7 (trust me I’ve tried) but as a team we can catch all of the best trades.
    • To make this work we need an orderly chat room, full of highly functioning people, all trading together.
    • In Curt’s words, the accuracy of the model plus the margins on Bitcoin combined with #TeamTrading will take this thing from Compound Trading to “uber quantum leap compound trading.” If done right, our ROI will be absolutely astronomical.
    • We will have a private Discord room for Cryptocurrency trading as well. I plan to use the voice channel to enhance our #TeamTrading and I hope many of you will join me in there.
    • As always, don’t hesitate to DM me on twitter (@reedshermanator) if you have any questions, comments, concerns, etc.

Primary Methods of Trade: 

Live Twitter Alert Feed for Bitcoin Trades: @BTCAlerts_CT

The primary method of trade we have found works with the most predictability is to wait for bitcoin to breach the upper right wall of a quadrant (the orange or grey diagonal dotted lines – the thicker orange lines are more significant) and confirm over the next horizontal Fibonacci resistance. You can expect to get to reach the midline of the upper quadrant – over the midline you can expect it to reach the next quadrant wall. Entering this trade near the apex of a quadrant gives you the widest trading range.

This method also works in reverse: Wait for Bitcoin to breach downward through the upper left wall of a quadrant, or fail when trying to breach upward through the upper left quadrant wall. Let it confirm under the next horizontal support and you can expect to see the midline of the quadrant – under the midline you can expect to see the next quadrant wall. Same as above, entering this trade near the apex of a quadrant gives you the widest trading range.

Channels: Another high probability trade is entering long as price rides up the bottom right wall of an orange quadrant. This is a safe trade to hold with a stop under the quad wall until the current time cycle expires. This trade works in reverse as well. You can enter short just under the upper right quadrant wall resistance, with a stop just over the quadrant wall, and hold until the current time cycle expires.

Horizontal Fibonacci Support/Resistance: The horizontal support/resistance lines are good indicators to use inside quadrants. The light green 0.5 Fibonacci line and the grey 1.0 or 0 fibonacci levels (midlines) are the most significant. Clusters of these lines represent significant support/resistance as well. Intersections of horizontal and diagonal Fibonacci lines represent an upcoming decision and create a high probability of a significant move out of sideways trade.

Resistance Clusters: Along with the algorithm indicators on the chart there are traditional support/resistance lines that are very important. When these lines converge volatility tends to increase. Under the cluster is a high probability short. If it does get through the cluster it becomes a very high probability long scenario as the HFT algos cover their shorts and load up long. The most recent cluster corresponded with the run over $3,000 to all time highs.

Targets: Red circles on charting. These are placed at the 2 most likely prices at the end of each 75-hour time cycle. These are still in very early stage of development/testing and should be used for observation only at this point. Two are provided for each quadrant time frame – the upper scenario targets should be considered if the trend is up and likewise for the lower. Only one is expected to hit on each time cycle. These targets have been less predictable with the recent market volatility. I do not recommend entering trades based on these targets.

Natural Support/Resistance: Natural support/resistance is represented on the chart by purple horizontal lines. Although generally reliable, these are not a great indicator in the current area of trade because they rely on history, and Bitcoin lacks that history over $3,000. The recent pullback has helped solidify natural support/resistance lines in the model. There are some significant natural resistance areas forming in the chart. Thicker natural resistance lines on the chart are the most significant. 

Conventional Charting: Recently we have been using more conventional indicators to supplement the model with great success. A few indicators I have found especially reliable are:

  • The 200 MA on the 30 minute chart: Price breaching the 200 MA to the upside is a reliable indicator for a long entry, especially with the 20, 50 and 100 below. A breach of the 200 to the downside is also a reliable indicator for a short.
  • The 20 MA on the 15 minute chart: Price confirming over the 20 MA ,or the 20 MA coming up to price from below, are high probability indicators for upward movement. 
  • Stochastic RSI: Useful on all time frames, the longer time frames carrying more weight of course. When looking for a long entry, wait for the stoch RSI to bottom. When it begins to curl up off the bottom, make your entry. This strategy gives a high probability of getting the “power” part of the trade right. 
  • VWAP: I have noticed that VWAP acts as significant support/resistance in Bitcoin. Loss of VWAP is a high probability short. 

Bitcoin Algorithm Live Charting Link:

$BTCUSD: https://www.tradingview.com/chart/BTCUSD/oWS3nIBA-BTCUSD-Updated-Charting-02-03-48-EST-16-Oct-2017/

$XBTUSD: https://www.tradingview.com/chart/XBTUSD/aFaVIEGE-XBTUSD-Updated-Charting-02-07-59-EST-16-Oct-2017/

$XBTUSD Gen 2 BETA: https://www.tradingview.com/chart/XBTUSD/3UQl6V0u-XBTUSD-Gen-2-Beta/

In summary, our first generation Bitcoin algorithm chart model uses the following indicators (listed from most predictable to least in terms of win rate): 

  1. Trading range created by long term algorithmic modeled quadrant support and resistance (orange dotted lines)
  2. Trading range created by short term algorithmic modeled quadrant support and resistance (grey dotted lines)
  3. Directional channels formed by long term algorithmic modeled support and resistance
  4. Horizontal Fibonacci support and resistance (multi-colored horizontal lines)
  5. Conventional Natural support and resistance (purple horizontal lines)
  6. Long term conventional trend lines (red diagonal lines)
  7. Conventional MA’s and MACD

A little recap of this past week:

We had an AWESOME week of trading as Bitcoin blew through ATH’s again! And we saw it coming from a mile away:

And now we have evidence that Curt is, in fact, addicted to #cryptotrading:

Observations in the current area of trade:

$BTCUSD daily quadrants helped predict run to all time highs (again):

$BTCUSD Still trading within a predictable upward trending channel since the end of September. Used full range as it blew through ATH’s. My bias remains long until this channel is lost to the down side:

Close up view of the current channel. Upper wall should be treated as significant resistance, downside wall should be treated as significant support:

$BTCUSD upcoming time/price cycle and targets/decision points:

$BTCUSD conventional charting shows current area of trade:

$XBTUSD tried to leave its current channel but tonight’s correction brought it back into expected range. This quad wall should be seen as significant resistance to the upside and significant support to the downside:

$XBTUSD upcoming time/price cycle and targets/decision points:

Our “right ear sidewinder” setup played out just as planned – straight vertical through all time highs: 

$XBTUSD move to ATH’s corresponded with our daily quadrants as well: 

A sneak peak at our 2nd generation model for $XBTUSD:

 

 

 

More Examples of High Probability Trades in the Model: 

  • Below is a textbook example of the highest probability trade in the model (break of the upper right quad wall). Trades like this are repeatable and extremely predictable in the model.

  • Below is an example of a trade over a resistance cluster (and break of the quad wall). Notice the huge volume when the resistance cluster is breached. I went long on new candle over the quad wall/resistance cluster, added over the midline and exited at the upper quad wall.

  • Below is a trade using both the large orange quadrants and the smaller grey quadrants. First trigger is breach of the (shared) quad wall, then confirmed over the midline in the small quad. Struggled a bit with the next quad wall (I use tight stops when playing the smaller quadrants) but eventually got to my target at the midline.

 

  • Although the targets are still in very early development phase, we did get a direct target hit down to the second on August 22. Also a good example of a short opportunity as it enters the quadrant from the upper left and loses its mid line. Then another good long opportunity as it enters the small quadrant through the lower left wall, shown by the white arrows:

  • I’m not on the short side too often, but I will do it when the upper left quad wall is breached to the downside. Another high probability trade in the model, this one live tweeted:

 

  • The best ROI comes when trade moves between quadrants, but we can do some intraday scalping off the quad wall too.

  • And another live tweeted win on the break of a quad wall:

 

 

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