Bitcoin recently had a huge breakout at the 5000 level. Several altcoins made big moves in sympathy to this breakout in the past week. The main altcoins that we trade in sympathy to Bitcoin are Ethereum and Litecoin. Our chatroom was able to capitalize nicely on a Litecoin breakout in sympathy to Bitcoin, and here’s how you can too.
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.
Here is the full length webinar: