As a crypto trader you should always be aware of what Bitcoin is doing when you’re trading altcoins. Ethereum and Litecoin tend follow the price action of Bitcoin when it has a major technical breakout or breakdown. If you’re looking for a long on Litecoin and it breaks a key area of resistance, and Bitcoin also has a breakout recently, the probability of Litecoin following through increases significantly. 

Look for Tightening Range

Once you see tightening range on the daily of any cryptocurrency, you should be on high alert for a breakout or breakdown (with cryptos these days it’s mainly breakouts). Once you see a break of this range, you will usually see some nice momentum. You should always set price alerts at key levels of resistance on charts with tightening ranges so you can jump in as soon as the range breaks. When you can combine a Bitcoin breakout with an altcoin breakout of a tight range, you are very likely to see some nice momentum and follow through of the breakout.     

Don’t Chase Altcoin Strength

Some altcoins are even more volatile than Bitcoin. This means there is more money to be made in some of them if you’re on the right side of the trade, but also more to lose if you’re on the wrong side of the trade. This means you have to be extra patient for your entry, and cannot chase strength. You cannot buy Litecoin after it has moved 4 points in an hour. You need to wait for a pullback to MA’s or several candles of sideways action to get an entry. Do not have the fear of missing a big move in these cryptos, they almost always give a second entry after the first big push is made.

Cryptocurrencies are an incredible new and exciting frontier in the financial markets. To prepare yourself to capitalize on this exciting new opportunity, check out our Cryptocurrency Trading Chatroom.

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Ethereum is the second most traded coin after bitcoin. It has the best characteristics to trading in terms of volume and range, my primary choice over bitcoin.

I’m going to be doing a live event on YouTube on Wednesday July 19th, at 5pm with Rahul Sood, CEO of Unikrn. He’s one of my old mentors and someone who helped me start Bulls on Wall Street. We will be discussing “The Future of the Cryptocurrency Market” and how we can all capitalize on the crypto boom including Ethereum and ERC20.

Ethereum

With Ethereum ETH, you can see that in February it was sitting around $5 – $12. Since then it’s had an epic run up. If you run from a few dollars to $400, there’s going to be a period of consolidation and pullback. That’s just the natural way stocks behave. Currently, ETH has been in a short term downtrend. So when does the bounce start? Well you don’t necessarily know. With trading, you can’t just assign a level and just buy into it. When you do that, you’re in no man’s land. There’s no confirmation that the level is going to hold.

I always respect the trend to both the upside and the downside. As its coming down, I make ideas of where potential support can be. $180 could be a potential level. But we don’t have any evidence yet. So how do you know that a bounce starts? Well, remember that bottoms are a process and rarely an event. What you want is to see some rounding action or some bottoming formation of where the support is holding. This is where we can add validity and let the support build. If it does, I’ll be watching the 9 EMA. The 9 EMA represents your short term moving average. If this MA is still curling down on top of the stock, it’s pushing it down. But when you see the trend reverse, your 9 EMA will start to flatten out. This will tell you that your short term trend is starting to even out. Then when you break over the 9 EMA and it holds, that’s when I’m looking to see if all things are a go.

Once the bottom formation develops, I’ll look on the smaller term time frame like an hourly chart and look for a bottoming process that clears some levels. Then we’ll get a clue as to what’s going to happen. But while we wait for the bottom we can actually short setups. When you see bear flags you can short them for some really nice gains. Participate both ways!

Make sure to join us for our live YouTube discussion on July 19 at 5 PM EST. Click here to set a reminder so you don’t miss it.

The post How To Trade Ethereum – Cryptocurrency To Watch appeared first on Bulls on Wall Street.