Bitcoin looks poised for a multi-month breakout over $21,600…
And if the last few days of price action in any indication of what we could see…
The move could stir up huge moves in crypto-related stocks.
But will sector momentum be enough to provide trade opportunities?
I don’t think so…
That’s why I’ll be looking for two things to line up before I consider a trade.
And I think you should too if you want to get in on this hot sector action…
How to Trade Bitcoin’s Potential Breakout
If Bitcoin breaks out over $21,600 there can definitely be trade opportunities in many crypto stocks.
Because like every hot sector — there’s always a sector leader. In the crypto sector that’s Bitcoin.
So all crypto stocks follow bitcoin closely.
Just look at these charts as an example…
First, here’s Bitcoin’s six-month chart.
Now, look at the six-month charts of these crypto stocks…
They’re almost identical.
And many other crypto stock charts look the same.
So before I trade any crypto stock, I’ll look at the bitcoin chart and see what it’s doing.
If bitcoin breaks out, many of these stocks could follow it higher. But if it fails, it could be ugly for these stocks that have already had impressive multi-day bounces.
The next thing I would look for in a potential crypto stock to trade is a catalyst.
When you have a hot sector stock coupled with news — it can create some of the best potential opportunities.
And just look at BTCM’s chart…
It had a nice gain last Friday on sector momentum, but when news came in yesterday, it pushed the stock up 52%!
BTCM climbed from an opening price of $3.57 to a high of $5.49 in just a few hours. Its dip and rip style move was one of the best morning moves out of all the crypto stocks.
Recognizing and trading hot sector stocks is one of the best ways to find the best runners.
But combining hot sector stocks with news, volume, and a chart pattern is how you can narrow a large sector of stocks down to the few with the most potential to run.
Start with the big picture idea and what the sector leader is doing. Then narrow your focus to the stocks that line up multiple indicators.
And don’t forget to join Tim Sykes tonight to discover how Mark Croock made one simple switch that changed his trading. He’ll also share how you can use it for yourself — get on the list to attend now!
Have a great day everyone! See you back here tomorrow.
Lead Trainer, StocksToTrade
P.S. Prep for whatever the market throws at you today — get my morning market update videos here.