Thinking Outside the Box Using the BTCXXX Pairing

It seems like forever that we entered correction territory but as time moves on we start to get clarity as the market provides more data. This also provides us with time to think outside the box. Well since there is not much to update I thought I would throw this out there to motivate some out of the box thinking. Both Litecoin’ and Bitcoin’ Cash are entering their 60th day of the correction and still trading 65%+- off their highs, yet Ethereum’ and Neo’ are only entering their 30th day and trading around 45%+- off their highs. In addition LTC’ and BCH’ corrected to the 0.786 level of the previous bull run and ETH’ and NEO’ corrected only to the 0.618 level. So what do we make of this going forward.

Litecoin’ has still not confirmed breaking of the down trend yet both BCH’ and NEO’ are showing signs of bullishness again. ETH’ is caught somewhere in the middle though it has broken the down trend has not closed above the trend line . So NEO’ is clearly the stronger of the coins here. But let’s take it one step further and look to how they are trading and have traded historically with Bitcoin’. Below is a chart of all four coins, and as I posted on the gold’ silver’ ratio the other day, we can look to trade this ratio to increase stack size without adding new monies.

The chart below for all four coins is the same as the inverse of the gold’/silver’ ratio. Using this ratio we can position ourselves overweight one for the other and through trading these ratios increase our stack without the need of adding new funds. Looking at the high and lows correlating to the ratio, BCH’ is trading right at the mean. Other than ETH’ the others are trading at or close to the top of the ratio. I am looking to buy at the lower end of the ratio as a trade, and will sell back at the top of the channel.

Using the both charts together, ETH’ appears to be the best choice at this point, but because it has not showed support above the trend line , I would caution buying here if you already own. If I did not own I would surely be adding a small entry position then looking to add on a pullback. Now keep in mind the lower chart does not have a lot of data. But it is something I will continue to track as trading this ratio could provide some side trading where you buy at an extreme low. I would not be selling NEO’ to bitcoin’ here at the top, just because of the chart above.

Bottom line: Though the market is correcting and sometimes this is a boring time, this is also a time for us to go beyond the standard technical analysis and think outside the box. The more information we look at the better our decision making will be. Whether you agree with this or not is insignificant, the point here was to get you thinking and looking at different market angles to be a better investor. Sometimes those things that provide a market edge are right under our noses. I am using this “boring” time to pull up charts, compare and look for anything that may provide an edge in the future and this is definitely one of them in my opinion.

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