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The Wolf Den #330 - High Conviction Trades

September 16 · Issue #330 · View online
The Wolf Den Crypto Newsletter
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I have had success with various trading strategies and experienced failure with far more.
The longer you trade, the more failures you will be forced to overcome in an effort to sharpen your skills and refine your strategy. As I have discussed many times, I have tried nearly every system, indicator and strategy that there is with mixed or largely negative results. Trading is hard, and there is a reason that 95% of people who try, fail.
I have also been a day trader, swing trader, investor, fundamental trader, technical analyst and more.
At this point, I wait seemingly endlessly for the perfect setup and go in as heavily as my portfolio can justify. I’m looking for a few good decisions to make my entire year as a trader, while I passively watch my investments grow. It suits my busy lifestyle and my temperament, largely stress free trading that does not require any babysitting and minimal management beyond moving stops into profit assuming the trade is going well.
Every single trade that you take is an opportunity to lose money. Period. The amount of money that you lose is the ONLY thing that you can control once you have entered the trade. The more you trade, the better your system needs to be, the more emotional control you need to have, and the more appetite for risk you must be willing to endure.
In my opinion, it is best to be an investor first, and take a few trades that are high conviction, with a slightly higher amount of your portfolio at risk, rather than try to manage a ton of small trades. This is what works for me, and is the reason I am in a single leveraged long at the moment on Bitcoin. My hope is that I found the bottom of this move and can ride it for quite a while.
Find what works for you, but understand that less is often more. If you are new, don’t overdue it, if you choose to do it at all.
In This Issue:
  1. High Conviction Trades
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Chart Requests
  5. Is Bitcoin Too Expensive?
  6. Change Your Chart Colors, Change Your Perspective
  7. OpenSea Executive Cheated
  8. The Mooch And SkyBridge Want More Crypto Exposure
  9. Ethereum Supply Shock
  10. The Wolf Of All Streets Podcast Ft. Daniel Matuszewski
  11. My Recommended Platforms And Tools

Bitcoin Thoughts And Analysis
The weekly candle is shaping up nicely, but it is only Thursday and we have until Sunday until the candle closes and we can properly judge it. As I mentioned on Monday, we often see a “bad” weekly candle like last week’s, which ends up just being a quick correction before price heads back up in a bull market. I believe we are still in a bull market, with a renewed bullishness after the break above 42K. If we see another drop, 42K and the 38.6% Fib (the move from 3800 to 65000) should be an interesting area of support, with the 50 MA pushing up below. That fib is $41,581.
As predicted (by John Bollinger as well), we saw a nice bounce off of the bottom band after the epic candle last Tuesday that saw price hitting both the upper and lower bands in a single candle - not something you see often. Price is currently interacting with the EQ of the bands, the center line that acts as support and resistance. Price is technically above it at the moment after closing above yesterday, but I still view this as resistance until we see price trading clearly above it. A break should bring price back to the upper bands as the bands widen, meaning we should see volatility. We obviously want to see that volatility to the upside.
Bitcoin has officially completed a golden cross between the 50 and 200 MAs on the daily, right at the level where price was trading, offering strong support and a push up. Whether it will hold or not is to be seen, as MAs tend to be lagging indicators, with the cross a result of the price movement up from 30K.
On my afternoon stream yesterday, I marked $47,637 as a potential spot to buy the dip if you were looking for an entry. As you can see, that is exactly where price dropped to and closed, even though it wicked below. That was the bottom of two of the previous 4-hour candles, so this looks like a simple resistance to support flip for now, which should technically unlock higher targets.
In my opinion, this remains bullish and I am feeling confident at the moment in my long from $44,700, which I have added slightly to on the way up.
Altcoin Charts
Altcoins continue to thrive as Bitcoin slowly rises and consolidates in this area. As you know, USDT pairs generally move somewhat with Bitcoin, so they are largely dependent on what happens next with the king. In my opinion, we keep trying what has worked (retests of resistance as support, especially all time highs) and ride it until the wheels fall off. There will be a time that Bitcoin ruins the party and “predictable” patterns fail on altcoins. That could be the minute I send this newsletter for all I know, but if your risk is managed, it’s not a big deal to stop out on the last round of trades and reset. For now, things look good.
I have been beating the drum about finding coins that are entering price discovery, buying the retest of the all time high as support and enjoying the ride. It does not work every time, but has been the catalyst for the biggest moves that we have seen from altcoins over the past few months (SOL, LUNA, etc.). HBAR has officially entered price discovery on the USDT pair, so we are looking to either buy here or grab a retest slightly lower. Usually the support test happens, but be aware that price can of course leave without you.
Generally, the best strategy is to spread limit orders out above, at and below support.
I drew this idea over two weeks ago, and it seems to be playing out. The manner in which price returned back to support is a bit aggressive, with a long series of down candles. That said, we have 2 candles that have wicked below support at 7571 and closed above, and a third that is attempting the same feat now.
Traders who like tight setups can take this with a high R/R, which means that if you are wrong and stop out, you lose very little. If you are high risk, then a candle close below that line would signal an exit. If you are looking for a larger trade with a wider stop, then stops would be below the next support down and the rising 50 MA, which should hold.
The target is a return to price discovery.
I shared this a few times before. We had a clear ascending triangle, but support on that broke 9 days ago on the Bitcoin dip. Still, we maintained the structure of a flat top resistance and higher lows on the bottom, meaning that price was consolidating towards resistance.
Price has finally broken through the red resistance and closed candles above, a signal that price should be headed back to the $23 - $25 area. This target is based on the depth of the ascending triangle and the recent swing highs. As you can see below, the all time high is not far above (around $28). If price reached there, I would expect resistance, consolidation, then price discovery. This depends on the market remaining bullish, of course.
Sushi has been largely lagging behind the altcoin market, trading sideways after a nice breakout from descending resistance and from the red trading range. A few days ago, Sushi managed to retest that range as support, a nice entry for those who were paying attention. Since then, it has moved bullishly, smashing through a few resistance levels on the way. $14.85 signaled a break of the recent highs and has now been retested as support. The break was on increasing volume, and today’s volume is likely to surpass yesterday’s.
While we normally look for a more convincing break (higher above resistance), this certainly counts. After flipping this level to support, there is thin resistance (almost none) to the recent highs and the all time high just above that. Those lines at the top are the target, although we know that if they flip to support, we will have price discovery for new highs.
Chart Requests
You guys requested 67 charts! As usual, my assistant Adam chose the top 30 or so and I looked at them on a live stream. Enjoy!
Is Bitcoin Too Expensive?
Is Bitcoin Too Expensive? - The Wolf of All Streets
Plenty of people believe that “Bitcoin Is Too Expensive’ and do not understand that you can buy a fraction of a coin. Should we move to "sats” as the main unit that we discuss? Here’s the quick and dirty on making Bitcoin more accessible to the masses.
Change Your Chart Colors, Change Your Perspective
Eliminate red from your charts to minimize emotional trading.
“Red makes you feel passionate and energized - it triggers opposing emotions. It is often associated with passion and love as well as anger and danger. It can increase a person’s heart rate and make them excited.”
“The color gray is an unemotional color. It is detached, neutral, impartial and indecisive. Being both motionless and emotionless, gray is solid and stable, creating a sense of calm and composure, relief from a chaotic world. The color gray is subdued, quiet and reserved.
Blue: "The color is one of trust, responsibility, honesty and loyalty. It is sincere, reserved and quiet, and doesn’t like to make a fuss or draw attention. It hates confrontation, and likes to do things in its own way.
This is a color that seeks peace and tranquility above everything else, promoting both physical and mental relaxation.”
Ever wonder why my candles are blue and gray?
Subtle, but makes a huge difference for me.
Red sucks.
OpenSea Executive Cheated
OpenSea Confirms Executive Used Insider Information to Snipe NFTs - BeInCrypto
An executive at OpenSea, the popular NFT trading platform, used insider information to profit on NFT sales, buying them before they were sold to the public and then flipping them once they were available to everyone. Gross.
The goal of decentralization is to eliminate incidents like this, but it is clear that we still have a long way to go.
The Mooch And SkyBridge Want More Crypto Exposure
SkyBridge Capital Files With SEC To Launch Crypto-Adjacent Exchange-Traded Fund - The Daily Hodl
“According to the Tuesday filing, First Trust SkyBridge Crypto Industry and Digital Economy ETF will invest at least 80% of their net assets into companies related to the digital economy and the crypto industry ecosystem, but not digital assets themselves.”
We have seen a number of institutions take a similar approach, creating funds that purchase stock in companies invested in Bitcoin and building in the crypto space. This is a novel approach to gaining exposure to crypto without buying the underlying asset.
Ethereum Supply Shock
8M Ethereum Out of Circulation Points to a Supply Shock | Crypto Briefing
28.8 billion dollars worth of Ethereum is either staked in ETH 2.0 or has been burned through EEIP-1559 and the amount of ETH on trading platforms is at a 3 year low. This indicates that there is a supply shock for willing buyers, as demand is likely outpacing supply. This is the most simple concept in economics. Demand > Supply, number go up.
I will continue to repeat that I believe that ETH has far more upside as a trade or mid term investment than Bitcoin.
The Wolf Of All Streets Podcast Ft. Daniel Matuszewski
Podcast - The Wolf of All Streets
Daniel Matuszewski’s mantra for navigating the crypto space is “do you want to make money, or do you want to be right?” He elaborated on this idea, also discussing the future of Bitcoin and the crypto space with regards to regulation and politics. Anyone looking to make money in crypto should be taking notes on what Daniel says.
Dan and I discussed:
  • Do you want to make money or be right?
  • What is CMS Holdings?
  • Cash and carry trade
  • Gary Gensler and regulation
  • Crypto’s influence on politics
  • Where is Bitcoin in the cycle?
  • Money printing
  • Where is the opportunity in crypto?
  • Solana went down
  • Whales moving the market
Build on Harmony, run on all chains.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions. Code Wolfsden50%off for a 50% discount on the first month.
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: WOLF25
Mining for everyone! You can buy an ASIC and have it set up at a destination of your choice by them, and you only pay the electricity cost. Absolutely awesome.
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
Subscribe to my YouTube channel for free daily content.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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