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Penny Coin(s)

Correlation Breaking

When I first wrote about the Penny Coin Strategy, there was an important piece about correlation with bitcoin. When this idea first came about, it was meant to take advantage of the smaller alts rising alongside bitcoin, and that at some point this price correlation would end. It seems that today was the beggining of just that.

Each time BTC went up, the Penny Coins decided to move down, and the same when BTC went down, they went up. A few hours in a single day does not make the end of a trend that's been playing out for a few months. However it does gice rise to new strategy ideas to play out.

Breaking off from this correlation is not a bad thing. When they are correlated so heavily with BTC, as to not make a single move unless BTC does so first, can be frustrating for traders. It requires tedious analysis, linking levels on the Penny Coins to the levels expected of BTC, over and under shooting your price predictions can be quite easy, as they are not following their own technical rules, but instead relying on BTC's.

As price de-correlates, charting out the organic levels being formed by the Penny Coins becomes much easier. A general price correlation in trend is okay, but what we have seen recently has only been restrictive.

Penny Coin Strategy --> Penny Coins Strategy

Up until now I have only provided analysis on one particular Penny Coin, that has been Cardano (ADA), but after today I am going to be including another currency to the mix. Adding another coin to this strategy allows for greater profitability as you can compound your earnings owning both.

I have chosen this currency for two reasons. It has a solid and proven infrastructure, it is more than an ERC20 token and has its own platform on which it is used to create actual solutions of real-world value, applied in a decentralized manner. Secondly, today it showed signs of similiar de-correlation, and is likely to continue in the future.

Stellar's Lumens is currently #12 in crypto rankings, according to coinpaprika, and if you'd like an overview, see my e-book on the Top 50 Cryptocurrencies above.

Details


On the daily time frame, ADA has yet to have a close below this month's open, 2 weeks into the month. Currently flirting with the bollinger bands 20 day moving average, it will decide whether or not to retest the monthly open within the next 48-72 hours.

If the monthly open can keep its hold as support for the next week to come, if it's tested at all, then the next area of resistance will likely be 0.06377 USD. Some time around mid-June would be the official target time frame, coinciding with my BTC predition I also posted today.


XLM on the other hand, has closed below its monthly open, and traded below it for a full 24 hours before surging back above. A short lived support shows it retesting the opening level once again just three days later.

A short breakdown to the 3/7 high level of 0.06166 USD over the next few days is entirely possible. Next area of resistance would be in the mid 7 cent price area, specifically the mid-February reistance at 0.07609 USD. Again this to play out by mid-June.

Future Updates

As ADA and XLM, among others, begin to show their own ability to forge technically significant levels, the opportunities will be plentiful. I will continuously update these trends, at least weekly if not daily. Be sure to be following my Twitter and my Instagram to be notified when new articles go up, as well as Coin of the Day, and lessons in the Technical Training section.