All Star Charts Crypto Articles

Market breadth has to be the handiest tool in our technical analysis kit.

Sure, we love ripping through thousands of charts to gauge broad market trends. But breadth indicators are a cheat code. Putting in the work, we can easily quantify and, more importantly, visualize how well a market is being supported by its constituents.

Because remember, it will always be a market of stocks, not a stock market. Or, in this case, a market of cryptocurrencies.

There are numerous ways to optimize this data output; we can use this breadth data as the basis of a systematic approach.

Your trading system is only as good as your understanding of how well your system operates in different market environments.

If you understand that particular systems and strategies work better in trending environments but are terrible in rangebound markets, you can optimize your trading performance by leaning on different approaches depending on the market environment.

This is where quantifying breadth can have a lot of edge for a trader because it helps them objectively recognize the current market environment and, subsequently, which strategies they should lean...

We pride ourselves on never being dogmatic and always being open to any scenario.

What often marks a great technical analyst is the ability to choose to be objective and not letting emotion get in the way of analyzing money flow.

And we all have that choice.

We can be driven by an immediate emotional response and gather into an angry mob over the injustices of the FTX situation.

Or we can take responsibility for our own self-interest and continue to look for opportunities as they come.

It's hard not to feel like an asshole as I write this. But your only objective here is to make money. If you're a trader, you're not here for some greater good.

Now, to be clear, I in no way celebrate these misfortunes. Financial markets are brutal, and there’s nothing worse than the guy getting off on people blowing up.

But it’d be a terrible shame to walk away from this institutional crypto contagion without taking some lessons.

We’re all human beings.

None of us is infallible.

Markets like these remind us of the importance of risk management, which is so easily forgotten in the good times.

There’s such...

Our process is defined by the power of simplicity.

We don't need a complicated macro thesis to position ourselves appropriately in crypto markets. We find our edge in stepping back and identifying inflection points where we want to define our risk.

Risk should be front and center, considering recent events.

One of the takeaways from this entire FTX/Alameda mess is the necessity of risk management. Sam Bankman-Fried lost an empire in the space of a week.

If this isn't a great reminder to manage risk and position size accordingly, I don't know what it is...

A hilarious video made the rounds on Twitter showing Caroline Ellison, the 28-year-old CEO of Alameda Research, arguing against the use of stop losses.

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She also said that technical analysis is voodoo in the same interview...

This is the video recording of our November 11, 2022, All Star Charts Crypto Weekly Strategy Session.

Wow.

What can I say?

This is the most chaotic turn of events I've experienced being involved with crypto. For those who somehow missed what's happening, here are the brief details...

One of the largest crypto exchanges on the planet, FTX, has experienced a significant liquidity crunch. As a result, Binance has entered into a non-binding agreement to acquire FTX, helping to cover the liquidity crunch.

Any and all funds held on FTX are now gone.

It's the biggest blow-up in the industry's history.

This is the video recording of our November 4, 2022, All Star Charts Crypto Weekly Strategy Session.

Dogecoin and other meme coins are seeing a boom off the back of Elon Musk's takeover of Twitter.

It isn't isolated to the Doge. A slew of meme coins have been born since Elon tweeted an image of a Shiba Inu dog wearing a Twitter t-shirt for Halloween.

It's hilarious that his tweets never fail to pump these things.

So, is a new meme coin season upon us?

As technicians, we pride ourselves on never being dogmatic in our approach. If new data that invalidates our initial thesis presents itself, we're always willing to flip our approach.

Yesterday, we wrote that Ethereum testing a significant support zone suggests this rally is mean-reverting in nature. In that same breath, though, we noted that it's wise to treat every chart on its own merits.

If you adopt an overly broad picture of markets, you'll often miss some of the most straightforward trading opportunities.

With all that said, a few names are shaping up nicely in this tape.

Mean reversion is a universal element of the world we live in.

Reversion to the mean is a statistical phenomenon stating that the greater the deviation of a variable from its mean, the greater the probability that the next measured variation will deviate less.

In other words, an extreme event is likely to be followed by a less extreme event.

In financial markets, mean reversion is everywhere. This is especially the case in bear markets when prices dramatically rally following prolonged periods of sustained weakness.

As John Roque, one of the GOATs of technical analysis, would say, "We’re not in a reversion to the mean business. This is instead a reversion beyond the mean business."

Specifically, asset prices retracing to their statistical average isn't the rule, it's the exception. Rather, in most cases, asset prices will often overshoot their "averages."

With crypto markets bouncing over the last week, it raises the question, is this just yet another mean reversion rally, or does this move have some legs?

This is the video recording of our October 28, 2022, All Star Charts Crypto Weekly Strategy Session.

We came into the week anticipating some volatility expansion out of this range, which could potentially be playing out given yesterday's action.

This was the largest daily price change for most coins over the last month. Ethereum's broken out of this short-term trading range, with Bitcoin following closely behind.

It's nearly that time when we get a fresh batch of monthly candlesticks.

We only perform this exercise once the candlesticks are completed. But, sometimes, you want to cheat and peep a few days early.

What's great about monthly candlesticks is that it takes us a mere half hour to get through them all, which is only six hours a year.

We can't emphasize enough the level of value-add for such a brief amount of time.

It forces us to take a step back, and it gives us no choice but to identify the direction of the primary trends. We use them to put shorter-term trends into context, which is especially important in this choppy price action.

So, no matter your time frame, identifying primary trends and then working from there is a huge advantage over a blind bottom-up approach.

In the current state of the crypto markets, the overwhelming majority of names are in greater than 80% drawdowns.

Solana is down 90%.

Cardano is down 90%.

Fantom is down 95%.

Harmony is down 96%.

These are substantial drawdowns, and this is one of the most severe crypto bear markets by drawdown, loss realization, and capital...