Crypto On The Mend

I hope everyone enjoyed the extended weekend because now it’s back to work, you slackers! It’s going to be a turbulent week, so let’s get to it. Over the past week crypto currencies have been enjoying a continued stream of bids (not bits) which has of course benefitted our ongoing Bitcoin campaign.

I have to say that I’m really enjoying trading cryptos, not just because the trending action pairs with obviously insane (realized) volatility. Another reason has been the slow demise of the forex space at least in the United States since Dodd-Frank regulations threw a major monkey wrench into various domestic IBs. So for anyone who enjoys forex trading switching over to crypto isn’t exactly a big transition. Assuming of course you don’t mind seeing your open pair being cut in half in the course of a week. Which isn’t exactly something we see in forex very often.

Anyway I’m advancing my stop to near 18,800 which is about 3Rs in, leaving it hopefully enough room to rumble. Note however that a big hurdle is right ahead and it’s the 12k mark where the (still rising) 100-day SMA is expected to tangle with the now falling 25-day.

My Bitcoin Cash campaign unfortunately got taken out at break/even last week. Since it had exceeded 1R in profits I would have moved my stop to the prior spike high but things unfortunately transpired a bit too fast. Which incidentally is an important lesson, especially for you guys who aren’t able or aren’t interested in automated trading. Sometimes the best played out plans and most thorough campaign management rules won’t help you when price begins to accelerate.

I’ve got a bit more crypto goodness waiting below the fold, but let’s first take a look at what we’re up against this week over in the more traditional financial woodsheds.

And there you have it – FOMC minutes tomorrow evening and the ECB policy meeting accounts the day after. So with that in mind:

As you know I closed out my SPY debit spread on Friday and I’m glad that I did as I would have lost quite a bit of my gains. The IV term structure however continues its decline and a drop < the 1.0 mark would actually be a long entry signal. We are getting close but we’re not just there yet.

The VIX on its own has dropped back to its current (quite elevated) 20-day mean. And although positive it’s actually quite possible that we see another swing up in IV. I rarely see large spikes, i.e. > 15) which aren’t followed by at least one after quake. In other words we may see a bit more blood here until things start settling down.

Nevertheless I’m willing to take one for the team and grab a small long position for about 0.25% with a stop < 2690. Now if you plan on buying calls here then I strongly suggest you use a call debit spread. Because if we for some reason see a drop from 19 all the way to 14 over the course of this week then there wouldn’t be much left of your calls’ premium.

I would actually be interested in a long position in the EUR/USD here but given what’s on the roster this week I’ll just play it safe for now and see what happens first. Yes, that’s a possible double top on the daily panel, but I’m not going to get my hopes up as it’s guaranteed to not happen otherwise. Trading is a bit like dating – if you set your hopes on something you are almost sure to be disappointed.

Our crude campaign is proceeding slowly but steadily. Stop now trails about a handle > our entry point for teeny weeny profits. Looking good, Billy-Ray! Feeling good, Lewis!


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