Get up to date on the latest analysis and trading tips with our Crypto update week 1
- Lido DAO Breakout Incoming, or Profitable Ranging Market?
- Is Chiliz CHZ Support and Resistance About To Start New Bull Run?
- APE Is Caught in a Logarithmic Descending Triangle; What Happens Next?
Just like the rest of the market, Lido DAO (LDO) has been in a range since the November crash induced by the collapse of FTX. However, the consolidation may come to an end with a breakout. If the breakout does not occur, we can use the trading range to make profit with the RSI with region crossovers!
Consolidation Period
LDO entered the current consolidation period on November 9th, when it hit a low of $0.87. Since then, it has ranged between a low of $0.87 and a high of $1.30. This is an extensive consolidation range, consisting of almost 50%. You could also make a sizeable profit by just buying close to $0.87 and selling close to $1.30.
However, as we can see, the resistance level is around $1.30, so the swing highs can temporarily overcome $1.30 just to come back down again. Currently, the price is at the resistance level, but it has failed to perform a breakout as of 2023–01–03. To confirm a breakout, we need a candle to at least close above the $1.30 resistance level. Currently, we just had a high wick above this level.
If LDO manages to break out of this consolidation, the price will likely go to the next resistance at $1.85. The $1.85 level represents the last high which was made back in November before the crash, and stands at 50% higher than the $1.30 level. Therefore, if you choose to buy at the breakout and it materializes, you could be looking at a 50% profit at the very least.
However, if the breakout does not occur, we can use the trading range to make a profit!
Suitable Indicators
When the price is in a range, oscillators are usually the best choice to use, as they can accurately let us know where the bottom and top of the range are. This will allow you to buy low and sell high.
As such, an indicator like the RSI with region crossovers may be well suited for making a profit in such market conditions. The RSI with Region Crossovers on Cryptohopper sends a buy signal when the price comes back from being oversold. It then sends a sell signal (if you configure it as sell on Cryptohopper) when the price comes back from being overbought. Therefore, it mitigates the risk that you buy a coin that continues to drop and takes advantage of a strong rally without exiting prematurely.
In the example above, we have set the following settings for it:
- RSI Periods 7
- Oversold threshold 25
- Overbought threshold 70
Assuming that you trade with all your funds and taking into account a 0.1% fee per trade, this strategy would have yielded a profit of 35% in the last 2 months. While this is an impressive result for the current market conditions, please note that this strategy will not work well in a bear market, and you may end up with significant losses if you do not use a stop loss.
CHZ (Chiliz) is currently at support and appears to be trying to bounce back. What are the chances it will succeed? Let’s find out!
The details: CHZ has lost almost 90% of its value this year from its all-time high of $0.95. While this may sound like a lot, it is pretty usual in the crypto market, especially when it comes to altcoins. Even Bitcoin lost around 86% of its value at one point.
Chiliz (CHZ) Bull Run Ahead?
CHZ is currently priced at $0.11 as of 2023–01–06 and is very close to its 2022 low of $0.080, where we find the major support level. As you probably already know, support and resistance levels are not exact price points but price areas with some room for interpretation. If a coin has bounced once from $0.085, the next time, it can also bounce from $0.080. In this current swing low, CHZ has reached $0.0970, which is in line with the support level, which ranges (more or less) from $0.10 to $0.09.
CHZ is already showing signs of making a V-shaped recovery since it has started pushing up quickly. The next stop is the 25 exponential moving average (EMA) which has been a pretty accurate mobile support and resistance. Therefore we need a break and close above the 25 EMA before the rally can continue.
If the Bull Run commences, the next resistance level stands between $0.26 and $0.29. This is around 150% from the current price level. We have a minor resistance around $0.16 which is 40% higher than the current price, making the potential profit for this setup decent.
Looking Ahead: While many signs point to CHZ starting its bull run, we still need to be weary as CHZ has shown signs that it was going to make a quick recovery in May 2022 as well, before plunging back down and finally recovering in July. Therefore it may not be the best idea to enter with all of your funds but rather a portion of it and enter more later on.
ApeCoin (APE) has been caught in a Logarithmic Descending Triangle since June 2022; let’s see where the price will go from here!
The details: APE has so far touched the top of its descending triangle in 5 different rallies, and each time it held firmly. At the same time, it has only reached the bottom of the descending triangle 2 times, making a lower low on the second instance. This makes it seem like APE will break the triangle to the downside and have a violent pullback. But that may not be the case.
Why a break to the upside is possible
Here are the main reasons why a break to the upside is also possible:
- According to Bitcoin’s 4-year cycle, we are due for a bull run after this consolidation period which the altcoins will also follow.
- APE has already lost 90% of its value, which is more or less the bottom for most altcoins.
- The current support level is the lowest support level the coin has.
However, a significant break to the upside will likely not materialize now but later on when Bitcoin starts its bull run.
What is clear, though, is that when the breakout does happen, it will be pretty violent, as the price has been trapped for a long time already. In general, the longer the price is trapped in a triangle pattern, the more violent the breakout and the subsequent uptrend/downtrend.
Bottom Line: APE is currently caught in a descending triangle which can break on either side, but the most likely scenario is that it breaks to the upside in the future.