BY Crypt Borat ON 2/21/18 AT 7:00AM
Part 1: Technical Price Analysis
This is a two-part series on the technical and fundamental aspects of my top cryptocurrency pick — Xtrabytes. Firstly, I will cover the technical aspects of the price action over the last few months. This will give us a nice foundation upon which we can follow its historical background and fully analyze the fundamentals of the coin in the next part. This way we can see how critical the technical analysis of the price coincides with the developments, exposure and overall market trends.
Let us start off in the nude. This is the full chart:
Each candle represents one day of price action. We will use this to find critical points in time and price where it is ideal to enter. We will base our assumptions on past price movement and market behavior. We will also use the help of a couple of key indicators to give us a better idea of price ranges where we will find strong areas of support.
Let us begin with the first full cycle:
From this we can see that there was a big price run-up a few days after the coin hit the market, coinciding with the end of the large overall market appreciation in Spring of 2017. It then followed a major downtrend lasting several months up to the end of the final yearly quarter. Even without drawing any lines we can see key areas where the price touched and bounced off. Firstly, we will add basic support/resistance lines to mark the key areas we spot:
We can see that the 1500–1700 satoshi area was a strong resistance at the start of this coin’s path. Afterwards, intermediate resistance was established at the 700–500 satoshi area. The coin ultimately started to bottom out and build strong support around the 240–140 satoshi area. For me, two hits to the same price means a decent confirmation that there is support or resistance. Three hits solidify it.
If we add the volume tool we can see some interesting price action in play:
Two big red volume bars near the key support area were not able to break it, giving us a further confirmation that that is the bottom of the cycle and it is a good idea to start accumulating around that price range.
It’s important to remember that one must always search for at least three separate indicators to confirm a viewpoint with enough certainty. So, let us add one more indicator — Stoch RSI, to our analysis to solidify what we believe to be the bottom for Xtrabytes:
On both occasions we can see that the StochRSI was at the lower threshold implicating heavily oversold territory, meaning that selling pressure has subsided. This combined with the support lines and the volume analysis gives us a full confirmation that this is in fact the bottom of the price range. Any purchases made in that area are as good of an entry as you can get if you have reason to believe it will go up in the future based on your fundamental analysis.
In conclusion, we see that for pretty much the entirety of November one could have accumulated XBY in the ideal price range waiting for the break-out.
Let us now move on to the next cycle and see what has happened:
Massive growth! This is the beauty of crypto, and therefore so many traders are attracted to it. If you had accumulated XBY at around the 200 satoshi area, you could have netted yourself an enormous x27 growth cashing out at the top at 5500 satoshi. Even cashing out at the big resistance of the circle would have netted you a modest 1000% return outperforming almost any other asset classes known to traders and investors alike. In the span of less than 3 months. There are a few ways you can figure out where the top of a vertical price rise would be, so you can indeed catch that x27 growth. My favorite one is the Fibonacci Retracement lines:
You can never be 100% certain where a vertical push will end. But you can make a pretty good educated guess with the help of the Fibonacci Retracement tool. We drag the tool from the top of the first cycle to the bottom of it and extend it enough so that it encompasses the whole chart. If I was in the trade since the green rectangle, I would exit 20–30% of my position at the first resistance at 1.618. Afterwards, I would exit 40–50% of my overall position at the second resistance at 2.618. This would leave me with 20% of my original entry at least. This is in the extremely rare case that I have stumbled upon a gold mine and it just keeps going up. However, most of the time, the vertical move would be stopped at the 2.618 range, if not earlier. We don’t want to miss out on profits — that’s ultimately why we’re in the game after all. So, we cash out gradually as we go along.
But say you were not here when the first cycle was completing. Or maybe you hadn’t heard about XBY until it was too risky to enter, or until now even. How would we go about finding the next best entry point? We will use the same method we did with the first cycle, and in addition, utilize the already formed key support areas. It would look something like this:
First off, clear support is shown around the 1400–1700 satoshi area. That’s when the first cycle’s major previous resistance was, and that’s when the price stalled at the beginning of the next cycle. In addition, drawing the Fibonacci Retracement from the bottom to the top of the cycle shows that the 0.786 line is around the same area providing further confirmation. Finally, for a safe entry, the StochRSI would have to look like it is now, but when reaching the green rectangle. We can tell that price will not move much to the upside as it is below the critical golden ratio. That will most probably be a difficult resistance to break. If we judge from the first cycle, the most it would go up to is the 0.5 area before trending back down. The overall timeframe for the first cycle was around 190 days. If we take that at face value, then this cycle should bottom out around the 10th of June this year. We must keep in mind that with crypto as with any chart, nothing is 100% perfect nor certain. It could be a few weeks earlier or later before it starts the next vertical cycle upwards. But if one enters in the key support area at the right time, one can expect similar returns to the previous cycles. This is further reinforced by the fundamental analysis that shall come out next week for your reading pleasure.
I am personally holding on to all my XBY as I have entered around the 2000 satoshi area. I will use trading profits from other coins to reinforce my position at the key support and wait for the next big leg up. Whatever your strategy is, do not invest more money than you can afford to lose, and always enter a trade gradually. If the green box is the entry, put 20% at 1700, 30% at 1500 and 50% at 1400 satoshi. If a part of the entry doesn’t get filled, you can monitor for a radical change in volume and grab it to enter the break-out instead. Or, you can forego it and be happy that you’re holding it in Bitcoin instead. After you’re happy with your entry, draw up the Fibonacci Retracement from top to bottom and exit gradually at the two upper lines for thousands of percentage returns.
In the second part, I will be covering the fundamentals of Xtrabytes (XBY), how the coin was conceived, what the team aims to achieve, and how they plan to get there.
Follow me on Twitter @crypt0_borat for updates on XBY and some of my other top picks.