Market Mates

𝐄𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐏𝐨𝐬𝐭 - 𝐂𝐨𝐦𝐦𝐨𝐝𝐢𝐭𝐲 𝐂𝐡𝐚𝐧𝐧𝐞𝐥 𝐈𝐧𝐝𝐞𝐱

The Commodity Channel Index (CCI) measures the current price level relative to an average price level over a given period. CCI is relatively high (+100) when prices are far above their average. CCI is relatively low (-100) when prices are far below their average. Using this method, CCI can be used to identify overbought and oversold levels. CCI is generally more susceptible to showing divergences in comparison to RSI.

With a constant of 0.015 which allows for 70-80% of all CCI values to fall within the +100 to -100 range. CCI is calculated by determining the difference in average price (High, low and close) and the simple moving average (20 period) of this price. This value is divided by the standard deviation of price to the moving average. The standard deviation is combined

CCI = (AveP - SMA_of_AveP) / (0.015 * Mean Deviation)

Using the CCI ↓

𝐃𝐢𝐯𝐞𝐫𝐠𝐞𝐧𝐜𝐞

Divergence occurs when the highs or lows of price are diverging in structure to the highs or lows of the oscillator. It’s important to remember that Bullish divergence always deals with price and oscillator lows, while bearish divergence always deals with price and oscillator highs There are 4 different kinds of divergence:

Bullish Divergence (reversal): Price is Putting in Lower Lows while the oscillator is putting it Higher Lows. This can often precede a market reversal, as is demonstrates the price low is losing momentum.
Bearish Divergence (Reversal): Price is putting it Higher Highs while the oscillator is putting in Lower highs. This is the same as bullish divergence but reversed.
Hidden Bullish Divergence (Continuation of trend): Price is putting in Higher Lows while the oscillator is putting in Lower Lows. This can often be a good buying opportunity in a strong trending market, as it highlights a time in the trend where price is oversold.
Hidden Bearish Divergence (Continuation of trend): Price is putting in Lower Highs while the oscillator is putting in Higher Highs. This often represents a good shorting opportunity in a strong down trending market as it highlights a time in the trend where the price was overbought.

It’s important to note that relying primarily on divergence to pick trend reversals is an express ticket to the poor house, strong trending markets will often show divergences 2-3 times before actually reversing. Include conclusions drawn from the CCI indicator in conjunction with other trade indications.

𝒢𝑜𝑜𝒹 𝑅𝒾𝓈𝓀 𝐵𝑒𝓁𝒾𝑒𝒻𝓈

Among the list of psychological attributes considered vital to becoming a successful trader/investor, good risk beliefs are arguably the most important.

The problem is the average trader is they are risk-averse in the realm of profit-taking and risk-seeking in the realm of losing trades.
They will secure small profits in favour of taking wise gambles for larger plays and make unwise gambles to avoid taking small losses when in losing positions.

Because most people get into trading to make money – they will find it near impossible to create good risk beliefs as if this is your motivation to trade/invest then securing a small loss is in direct conflict with your trading objective.

Battling our own beliefs is extremely difficult as these are engraved into our very being over the course of a lifetime. The objective shouldn't be to delete them from your thought patterns but to slowly draw out the mental energy you give to them and transfer them to newer, more self-serving beliefs which are conducive to your long term goals. Among all else, learning patience, discipline and the ability to take your own ego out of your choices in the market (being ok with being wrong) are all giant steps in the right direction.

𝒞𝒞𝐼 & 𝒟𝒾𝓋𝑒𝓇𝑔𝑒𝓃𝒸𝑒

The Commodity Channel Index (CCI) measures the current price level relative to an average price level over a given period. CCI is relatively high (+100) when prices are far above their average. CCI is relatively low (-100) when prices are far below their average. Using this method, CCI can be used to identify overbought and oversold levels. CCI is generally more susceptible to showing divergences in comparison to RSI.

CCI is calculated by determining the difference in average price (High, low and close) and the simple moving average (20 period) of this price. This value is divided by the standard deviation of price to the moving average. The standard deviation is combined with a constant of 0.015 which allows for 70-80% of all CCI values to fall within the +100 to -100 range.

CCI = (AveP - SMA_of_AveP) / (0.015 * Mean Deviation)

Divergence

Divergence occurs when the highs or lows of price are diverging in structure to the highs or lows of the oscillator. It’s important to remember that Bullish divergence always deals with price and oscillator lows, while bearish divergence always deals with price and oscillator highs There are 4 different kinds of divergence:

Bullish Divergence (reversal): Price is Putting in Lower Lows while the oscillator is putting in Higher Lows. This can often precede a market reversal, as it demonstrates the price low is losing momentum.

Bearish Divergence (Reversal): Price is putting it Higher Highs while the oscillator is putting in Lower highs. This is the same as bullish divergence but reversed.

Hidden Bullish Divergence (Continuation of trend): Price is putting in Higher Lows while the oscillator is putting in Lower Lows. This can often be a good buying opportunity in a strong trending market, as it highlights a time in the trend where price is oversold.
Hidden Bearish Divergence (Continuation of trend): Price is putting in Lower Highs while the oscillator is putting in Higher Highs. This often represents a good shorting opportunity in a strong down trending market as it highlights a time in the trend where the price was overbought.

It’s important to note that relying primarily on divergence to pick trend reversals is an express ticket to the poor house, strong trending markets will often show divergences 2-3 times before actually reversing. Include these indications in conjunction with your technical analysis appraisal of any given setup to get the complete picture

Who uses the CCI/RSI or other momentum indicators? How do you use them?

NFA DYOR

All eyes on bitty this week! - 29/11/2021
Can definitely start making a case for the bulls here, but I am currently on the fence.

𝕭𝖚𝖑𝖑𝖘
- Daily Morning Star
- Putting in Bull Div on daily CCI
- Holding above the 100D MA (Held this line back in September at 39k)
- Daily uptrend coming in (Right on price in logarithmic view, still some room to fall on linear)
- Tested the 0.5fib level and our previous weekly high of 53800 and currently holding

𝕭𝖊𝖆𝖗𝖘

- Downtrend to break
- Lost the 8w MA - generally a sign we will come and test the 20w MA in bull runs. Currently sits around 50.5k
- Lots of FUD entering the financial markets last week with some new COVID bombshells dropped, with the stock market getting hammered some financial institutions may be turning their risk-off in other markets such as crypto to help reduce equity drawdowns.
- Yet to test the Weekly uptrend on the linear chart, this is a high confluence area with the 0.618 fibs and the 20w MA are all located in this area, if the price takes another hit this week it's where I expect support to be found.

BTC Dominance is slowly but surely turning around - some signs that BTC may be getting ready to steal the show soon. Not getting too excited yet but probably the first time in 2 weeks that I can entertain the probability of some upside soon.

NFA DYOR

𝙀𝙡𝙡𝙞𝙤𝙩 𝙒𝙖𝙫𝙚𝙨

These are perhaps one of the most accepted forms of technical analysis as they explain the natural rhythm of crowd psychology in strong trending markets which manifests in the form of waves. While widely accepted, little understand them enough to spot them when they are occurring, and how to use them. Elliott Waves are fractal, and the underlying pattern remains constant. The 5 (Impulse) + 3 (Correction) waves define a complete cycle. They can form different patterns such as impulses, ending diagonals, expanded flats, zigzag corrections and triangles.

Wave 1 – Impulse Wave

Kicks off the run, many of the parameters of this leg will be important in determining targets & retracements for other waves.
The crowd sentiments are decidedly bearish if it happens just after a downtrend. It progresses very silently and consistently and tries to make a case as the majority of investors are not so confident to generate a new position after a long down movement, it might be complete in weeks or months.

Wave 2 – Corrective Wave

Begins when investors are in the mood for profit-taking. This wave is corrective in nature and against the main long-term trend. It is not extended beyond wave 1. In normal cases, it corrects up to the 0,618 or 0,786 of wave 1. In some cases, it extends up to the point of wave 1. Can be somewhat a consolidation type move in bullish markets represented by flat corrections before moving back in line with the major trend.

Wave 3 - Impulse Wave

At the beginning of wave 3, the news and sentiment is still bearish after correcting considerably, or even all the way from wave 1. But by the midpoint of this wave, the crowd will jump on this bullish trend as the news and sentiment is now positive. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat.

Wave 4 - Corrective Wave

Normally a shallow corrective wave to the 0.236 or 0.382 fib level. Price meanders sideways for an extended period with low volume compared to wave 3. Often frustrating for crowd pyschology as it is impeding the direction of the general trend. Wave 4 most commonly forms triangles to round off the wave. This is often a good place to buy in a pullback if you understand the potential of wave 5.

Wave 5 - Impulse Wave

The final leg in the dominant trend, the new amateur investors FOMO in and are now certain this is an unstoppable bull run. This cohort of traders and investors drive the price up one last time. The sentiment at the top of this run reaches levels of extreme euphoria and many momentum indicators will be showing divergences.

Here I’ve outlined a very basic Elliot wave with common fib retracement and targets based on wavelengths. These are far too complex to cover in a single post when considering all the different types of corrective waves and the fib retracements/extensions associated with them.

*Any information shared in this post should not be considered financial advice, always do your own research when making financial decisions

Trading Simplified.

Trading somewhat has a negative connotation with statistics declaring that you are better off not doing it. However, the true evidence is that trading has the ability if done correctly, to magnify your profits, allowing you to gain access to a compounding, steadily rising equity curve.

Fundamentally, FTM is a solid choice for most portfolios and holding this coin aligns with common investing strategies.

But if you knew how to trade, you would be able to take advantage of market movements, holding cannot give you.

I have outlined the simple triggers I used to take this trade. Trading, like any skill, once acquired and trained, you will always be able to use it. Success is always 1 choice away, choose wisely.

NFA DYOR