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Do Charts Work on Crypto Trading?

As cryptocurrencies pick up in popularity, something that I’ve been seeing more of is people wondering (which I should note, is a valid question on their part) if the tool of technical analysis can be applied to crypto trading. Whether you are talking about Bitcoin, Litecoin, Ripple, Ethereum or one of the many alt coins… I’m happy to report (and prove) that technical analysis does indeed work! In this video I take some real life data and how a prime example of how the tool of trading cryptos with technical analysis proves to be profitable.

Learn how to use charts to trade cryptocurrencies – click HERE.

http://claytrader.com/videos/ripple-chart-technical-analysis-8/

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Transcript:

Hey Clay, I want to get into crypto-trading,I want to get into cryptocurrency investing.I know you're all about technical analysis,but does technical analysis actually workwith the cryptocurrency market?Let's talk about it.That's actually a super-good question,and a very popular one that I've been gettingas cryptocurrencies continue to fillthe headlines, and who knows, maybea couple of years from the time I dothis video, someone will go, whatare you talking about cryptocurrencies,but I think they're here to stay.In what form, I don't know.But let's get to the question here,and the question is, do charts work?So let's just talk about technical analysis,the use of charts.What actually is a chart?A chart boiled down to its simplest kindof common dominator is two things.You have down here, volume, meaningis there a market for it?Are people exchanging something?Something, I'm not saying stock,I'm not saying options, just something.Well let's run that test real quick.Are people exchanging somethingin the cryptocurrency market?Well yeah, they're exchanging currency, cryptocurrencies.So yeah, alright, check.The other big part of chartingis over here, price.Or you could look at this as value.So again, let's run it through the test.Does that something that they're exchanginghave a value, have a price associated with it?Well, in the cryptocurrency market,of course it does.I mean, a market by definitionis gonna have prices and values.So once again, yeah, the crypto market not only haspeople exchanging something, but that somethingalso has a price and value.So yeah, absolutely, absolutely chartscan be used in the world of cryptocurrency.And I realize this is just theory on a whiteboard,and that's a totally fair point,so what I'm gonna do is take you to my desktop,and before I get to my desktop,I want you to watch a video chart analysisthat I did on Ripple, one of themany cryptocurrencies out there.And these video charts, if you're not familiar,I do them on a daily basis, and I just talkabout the basics, but the basics evenin charts can be very, very powerful.I really harp on it in the videoon my desktop, but I just wantto get it across right now too,I'm not sitting here saying that chartingis the secret sauce, that chartingis the holy grail for cryptocurrency,and it turn you into a millionaire.I'm not saying that at all.Are they a very useful tool?Yes, 100% they are a useful tool.Are they always perfect, do they always work?No, of course, not but there is no such thingas a perfect system in the market.Like I said, I do reiterate thatas I get onto the screen, but I want youto first, like I said, watch this videothat I've done beforehand, and then I'm gonna take youto my desktop and walk you throughwhat happened afterwords, and you're gonna seethat, not only do technical analysis,not only do charts work with the crypto market,but they can actually work very well.So let's get to that video, and then I'll seeyou on my desktop.And sitting between these candlesticks hererepresenting one day's worth of price action,which is what you would normally see,each one represents 30 minutes worth of time.So while this here may looklike several day's worth of time,it's actually just today's price action broken downinto 30-minute time slices.I look to this timeframe kind of does a good jobof telling the quote unquote story of a price,and in this situation makes mapping outa very logical question quite straightforward.And that question revolves aroundthe fact that over the past day or so,Ripple has made a really, really nice move.I mean, when you consider wherethe price was at these low points,and then you consider where it is right now,and I just say that where that is right now,because the markets are open 24/7.So I can't say the price closed there,but that's currently where it is,point here being that any rational personis gonna say yeah, Ripple has definitely madea very nice bounce.Now this leads to the valid question,therefore of, but is there any sortof true power behind this bounce?Is there any sort of genuine strength,or is this just some sort of knee-jerkreaction dead cat bounce?I have no idea, but like I said,by using charts, we can make answeringthat question very straightforward.And in my mind, it all revolves aroundthe level down here, which is supportand I don't quite know the value yet, what is that?78 cents, why, or yeah, 78, why is 78 cents so important?Well hopefully, we can all agree on the logicthat price movements with true power,with genuine strength, the priceis gonna progress forward.The price is not gonna go back to where it was.I'm assuming you're saying, hey thanks captain obvious.Of course a price movement with true poweris not gonna go back to where it was.That would be a contradiction, exactly.So with that mind, think about 78 cents.Any sort of closes blow it, or worse yet,if the price separates to the downside,what would that be doing to the price?That would literally be puttingthe price right back insideof this range of the chart that it just broke out of.Again, going back, not a sign of true strength.Whereas let's say the price pulls back,so over the weekend pulls backand then does something like this,and then starts to work its way back upwards.What would you have in this situation?Well, you'd have a set of lows right here,you would have this previous set right there.If you picture each one of those as stair steps,well hey, now you have stair steps progressingin the upwards direction, and that's the name of the game.That's what a truly strong move is gonna do,it's gonna make progress forward,and in this situation, I am defining,quote unquote make progress as 78 cents.Now what about areas of resistance?So if this upwards move is goingto continue, where some of these key battlegrounds at.As it stands right now, the main levelof resistance, let's get that changed to red for resistance,and I almost put it right where it needed to be.But right up here, give or take aroundthe 96-cent mark, you can see several occasionsover the past that prices have been up around this area.You go back here through the history of the chart,knock down the price there, knockedit down, knocked it down, so you get the idea.But really in my opinion, top priority right nowis not breaking levels of resistance,top priority is over the weekend,going through health consolidationand beginning to build higher bases,because as long as higher bases startto be built, then that's how this overall bouncecan pick up that much more steamand maybe even potentially turninto a reversal, but one step at a time,that first step is staying up above 78 cents.Welcome to my desktop, and hereis the chart that should look very familiar.This is what it was looking likeas I did that video, which you just got done watching.And I want to really reiteratethe point of this is not to try to come acrossor make you think that technical analysis,the use of charts, is some holy grailthat's perfect all the time, thatit's some sort of secret sauce in the market,there are nothing like that, it's a toolthat can be used, but it is not a holy grail,they are not perfect.Does it work in this case?Yes, as you're about to see, it does indeedwork, however I don't want you to think,I don't want to come across as somebodythat's trying to portray that hey,if you let me teach you how to use charts,then you're gonna just, it's gonna be easy money,it's gonna happen so fast because thisis the secret sauce, this is the secret strategy, no.They are a tool, they are used to managethe unknown, but like anything else,nothing is ever gonna be right.If something was always right,then by definition it wouldn't work anymore,because everybody would do it,which would just kind of convolutethe effectiveness of it.So let's just go through it, and you're gonna seelike I said, you saw the video,you saw me using the chart to talkabout kind of the things going forward,so let's just kind of sit backand then see how this all unfolds.So, as time goes by, and again each oneof these represents 30 minutes of time.So 30 minutes is going down and obviouslythe key level to keep an eye on is that 78-cent mark,as that is what I really kind of basethe whole analysis on in the premisethat you heard me talk about.So the price is just kind of chugging along,and all of a sudden, the bears start to show up.Price starts to drop, now the priceis starting to drop that much more.And now things are getting really rough.I mean, to think that not that long ago,the price was up here around 90 cents,now it's all the way down there,and you can see the price is dropping pretty quick.It is approaching the green line support,which I talked about, and right there,went down to a low of .79594.So let's just call it right thereat essentially 78, and then right thereyou can see that right there once again,at a basically 78 cents, as far as where these lows are.The low of this one was right thereat .77802, so we'll round up and thereit is right there at 78 cents,and you can see now the pricehas started to show some signs of going sideways,some signs of consolidation, so we'll just kindof let things unfold there.And you can see now, what a coincidence,I mean when you really stop and thinkabout it, the price rolled overand was going down, and down, and down.What a coincidence, what a coincidence right there.This is why I laugh, this is why you should always lookat people with a skeptical eyethat says, charts are worthless,charts are a total joke.Past history tells you nothing,that's all based on old information.Now you should also look at somebodywith a skeptical eye if they're saying,yeah, charts work all the time,charts are the holy grail, charts are the secret sauce, no.There is definitely a middle ground there.And I am trying to convey, the middle groundis that yeah, they have their use.It's not always gonna work, but they havetheir place, and when you can understanda chart, you are able to outline and manage riskand reward and all that good stuff.So watching the rest of this unfold,and we'll kind of get to it, but you can seethe bounce there continues, and it continuesand it goes all the way up as high as a $1.02.And I ran the calculations on that,and that was a 31% profit window.Now, am I saying that you would have absolutely nailedand capitalized perfectly on this 31% right here?I am not saying that you would have nailed 31%,but let's say you maybe played it half right.That's still a nice 15% gain all in the periodof basically just a few hours.So I mean a few hours and getting 15%,heck, let's just say you only got eight,nine, 10% on it.Given the context of it all happeningin the same day, I'm pretty sure you can't walk downto your local bank.I mean you can, and if you do do this,please record it, but hand your,the bank teller some money and say,hey, I want an 8%, I want a 9%, I want a 10% returnby the end of the day, and record their reaction.They're gonna look at you like a crazy person.So keep things in context, a very nice move happened here,and this was all based on the chart.And like I said, none of this happenedin hindsight, the chart was posted,you heard me talk about all this,and then surprise surprise, right offof 78 cents is where the price bounced,leading to, as you see here, a 30% profit windowwhere even if you didn't play it perfectly,still plenty of opportunity to make some money,and that's the name of the game.So, right here, prime example of a chartworking on Ripple, which of course is a cryptocurrency.Yeah, 30% in less than a day, like I said,pretty nice profit window even if you didn't quiteplay it perfect, you played it half right,a quarter right, and that's still some nice percentagesgiven the amount of time, and it was all dictatedby forming a logical entry point for that trade,and logical entry points, logical exit points,how to manage trades, and in a nutshell,how to manage the unknown, that is what technical analysisand charts is all about, because once again,yes cryptocurrencies have volume,something is changing hands, and yes,they both have price and value associatedwith that something that is exchanginghands within the market.If you are interested in learning charts,I would love to help you out.My only sales pitch to you is, if you likeall the other free content that I haveon my YouTube channel, have on my website,then you will for sure like my premium contentthat I offer, so I'll put a link down belowto the courses that I offer.And sure, none of them are called cryptocurrency trading,or crypto-trading or anything like that,but they're all teaching you how to use a chart.And as you saw, when you know howto use a chart, then you're about 95% of the way therein terms of trading cryptos, so give those courses a look.Like I said, if you enjoy my free stuff.If you hate this video, if you hate allmy other free stuff, then yeah,definitely don't spend your money on those courses.But if you do like this stuff, then yeah,you will definitely enjoy that stuff, so check it out.If you are out there trading alone currently,and maybe are in the market looking for a communityto join to assist you in your trading,or to just help you give you another set of eyeballs,then I do have a private trading communitywhere you can trade alongside meand other experienced traders.So what you see popping up on the screen right nowis both an information link, so if you clickon the Inner Circle one, that is goingto take you to the page where I explainall the details of what exactly come with the community,both the chat room and the newsletter.And then the other image that has popped upis a behind the scenes tour, where you can seeexactly what is going to be contained within the community.I take you through like I said, a behind the scenes tourof everything, and that way you'll know preciselywhat you are getting when you join.So definitely check that stuff out if youare interested and thinking about wantingto join a community, and let me knowif you have any questions.

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