Get ready for an exciting journey into the vibrant world of Solana NFTs! In this newsletter, I will delve deep into the alpha points of the Solana ecosystem and bring you exclusive interviews with key players within this space. I will provide you with expert technical and fundamental analysis to help you hone your trading skills and grow your knowledge of this dynamic space. Each newsletter will have a specific theme to keep you engaged and informed. Join me and discover the thrill of NFTs on Solana!
🛑This newsletter is for entertainment purposes only, none of this is financial advice🛑
Welcome to "The Alpha Insight," your go-to source for all things NFT trading and investing on Solana! In this edition, we're diving into one of the key analysis indicators relative strength index (RSI). I will also give a quick introduction to adding indicators and adjusting chart layouts. As an alpha analyst, I'll be sharing my insights on how I use this indicator to build a trading strategy. But that's not all - we'll also be showcasing our "project of the week." Join me on this journey to becoming a master of NFT trading and investing.
(Download and view in PDF format for a better reading experience)
Swing Trade - Shorter term trading with the intent of buying low and selling high within an assets price trend.
Timeframe - The total time set for each candles duration.
Chart - A graphical representation of historical price movements.
TA - Technical Analysis
FA - Fundamental Analysis
AMA - Ask me anything
DYOR - Do your own research
DD - Due Diligence (Research)
Moon Bag - The intent of holding something in hope the price increases drastically (Holding to the moon!)
Raiding - The act of increasing awareness of a post by retweeting, commenting and liking.
Charting 101 - Layout and Indicators
In this edition, we will be going over a new charting indicator. The first step to using indicators is adding them to the chart. This is a simple process after you do it for the first time. There are 2 charting platforms for NFTs:
-SolSniper.xyz
-HelloMoon.io
Both web apps are useful for different things. SolSniper is my preferred charting platform, mainly because it has every indicator I require, but occasionally has missing data on the charts. On the other hand, HelloMoon has a vastly superior data tracking system but doesn’t have one of the most important indicators for my trading style, ‘listings count’ (Which will be explained in another edition). All charting platforms use Trading View as the actual charting software. Trading View is the top charting software used for all asset classes. This means that adding indicators or changing settings is the same across all platforms.
Let’s have a look at how to add indicators to your charts. (Follow the video tutorial for reference)
Step 1 – Click the indicators tab at the top
Step 2 – Type ‘RSI’ into the search box
Step 3 – Click on ‘Relative Strength Index’
Step 4 – Close the indicator tab and you will see the RSI indicator has been added below the price chart
You should now be at a stage where you have a pricing chart on the top of the screen and a strange-looking chart below. The video tutorial below will also show you how to adjust the size proportions of your charts, edit colours and settings and disable some pre-set overlays. I will explain more about the RSI settings in the next section.
(SubStack does not support direct video input, please use this link for a video tutorial)
The relative strength index (RSI) is a tool that helps us understand whether an asset is being bought or sold a lot. It does this by looking at how much the price goes up or down over a certain period, like a day or week.
You have a scale that goes from 0 to 100. If the RSI is at 0, that means the investment hasn't gone up or down very much. If it's at 100, that means the investment has gone up a lot. If it's at 50, that means the investment has gone up about as much as it has gone down. It is essentially a momentum indicator that oscillates depending on the price movement.
RSI levels above 70 are generally considered overbought, suggesting that the asset’s price may be due for a downward correction. Conversely, RSI levels below 30 are considered oversold, potentially signalling an upward price trend. When RSI breaches either level, it means that there are more buyers than sellers or vice versa. An asset’s price action will never go straight up or straight down, the asset loses momentum and will revert in the opposite direction and cause a correction or retracement. Almost all assets will revert to the mean, the middle level, which in this case is 50 RSI.
Another part we need to understand is the settings of RSI. When you open the settings, you are met with some differing values. ‘Length’ is the only value we need to worry about for our chart. The length refers to the number of periods that the indicator will use to calculate the average gain and average loss. For example, if the length is set to 14 periods, the RSI will use the price action over the past 14 periods to calculate the average gain and average loss.
When you change the length or smoothing length of the RSI, it can have a significant impact on the resulting indicator values. A longer length or smoothing length will result in a smoother, slower-moving indicator, while a shorter length or smoothing length will result in a quicker, more reactive indicator.
When we use RSI on NFTs I like to set the length to 10. NFTs are extremely volatile assets in which price action can move 100%+ in a matter of hours. Due to this, I like to have the RSI set to a shorter time calculation to keep up with the fast-paced market. I highly recommend having a play around with the settings and numbers on your chart to understand how it alters the effect of your RSI chart.
Now I know this all sounds quite complex and hard to comprehend, so let me give you one quick summary based on my understanding and then dive into some examples. RSI to me is an indicator that can help me find opportunities where the asset I am researching is overbought or oversold. If everyone is buying the asset and the RSI is heading towards 70 levels, I want to be selling. When everyone is selling the asset and the RSI is heading towards 30 levels, I want to be buying.
The momentum of an NFT project can change in an instant, as a trader my goal is to sell into pumps and buy into dumps. RSI give an overview of when these two things are possibly happening. Mix this indicator with support and resistance levels that we covered before, and you can identify key levels to react upon. Let's go over some examples.
Taiyo is a very historic project with a very long track record. They have been a blue chip project for most of this time which makes them a perfect subject for analysis. I have correlated every time the RSI hits 70 (overbought) and every time RSI hits 30 (oversold) with the price action above. I’m going to isolate the chart between the strong upper resistance and strong support.
As you can see, every time the RSI breaches these levels mean reversion is due. Each red circle is a sell signal, each green circle is a buy signal. Hypothetically if you brought and sold into the RSI signalling alone, the minimum profit you would have made was 50 Solana. By just following RSI! You can also see that when RSI crossed 30, shortly after there is a very volatile, sharp increase back to 70 followed by a slow bleed until the RSI hits 30 once again. The deeper RSI goes into the overbought and oversold level indicating a more urgent need for a retracement. Now, we have just hit an RSI of 88 smashing through the previous resistance level. I expect a retracement, of both RSI and price action, to happen with RSI eventually touching 30 and price finding a new support level.
This chart is taken from when Alpha Pharaohs first minted. The reason I choose this specific price range is that I remember trading these RSI swings at the time. The chart layout is a perfect example of how-to swing trade with RSI.
With this, there were eight solid opportunities to swing trade. The price may not have been moving very much but the percentage gains per trade are approximately 70% each time. Every pump is followed by a slow bleed into a dump, repeated numerous times. When I saw this playing out after the first couple of times, I started to play this swing trade. I used my support level and RSI to give me a clear buy signal. Some people may be put off by trading a project with such small profit margins, making only 0.3 Solana per trade, but let me share this simple hypothetical strategy.
In this hypothetical strategy these are the rules followed:
Starting balance is 1 Solana
Average buying opportunity 0.4 Solana
Average selling opportunity 0.65 Solana
Every trade made is indicated by the RSI crossing either 30 or 70. Once a trade is made all the NFTs will be sold, or the total balance will be used to buy NFTs.
The results are astounding! This trading period is over the span of 11th June to 4th August. This strategy turns 1 Solana into 48.62 Solana on paper. This example is not an outrageous possibility either, it just requires trusting the market and sticking to the plan.
Project Spotlight - BLXCKOUT
I’ve been a big fan of this project for a very long time. The team have been building for months on end and they are finally getting the recognition they deserve, but they are just about to start the real portion of their journey.
The team are extremely proactive and has been working on many different products over the past few months. One of the recent products released was the SPORT-X Betting which is fully operational Discord sports betting bot. This was utilized for the world cup and allowed community members to place bets against one another on any world cup football match. It worked extremely smoothly and is easy to use, this bot has been utilized by a host of projects and the team is planning to add other sporting events to the product now that the world cup has ended.
Another useful product BLXCKOUT has released is an RPC Node available to use. RPC private nodes are used by botters, snipers and developers to allow extremely low latency while operating on the Solana network. As Phantom wallet users, we are all occupying the same node supplied by Phantom which can cause some congestion at peak times. This is how minting bots manage to mint multiple NFTs while I can’t get a single transaction to succeed.
The main product that the team are developing is cloud storage built on top of the blockchain called ‘SYNX’. A storage solution that is backed up by a seed phrase, imagine your iCloud or Google Drive account but built for the crypto-verse. This is a huge piece of technology that could help shape the future of Cloud storage and Solana going forward. So much so that Solana mobile themselves have shown interest in the product. There is a high chance that we will see SYNX being a standard, key app pre-loaded onto the Solana mobile when it launches.
To top this all off, the project recently secured a $2,500,000 VC pre-seed funding from the Solana investment firm ‘Layer One VC’. Which is huge news for the team. This has allowed the team to quit their web2 jobs and go full-time web3 and pursue BLXCKOUT to its full potential. With an art upgrade coming soon for the NFTs this year is going to be a big year for the team.
Summary
In this newsletter, we have learnt how to add indicators to our charts and alter the layout. We have taken a deep dive into what RSI is and how it works with a few examples of how to utilise it when trading. Lastly, we have explored the project BLXCKOUT and the promising future they have ahead. Following this issue, I will be writing up an RSI example newsletter full of real-time examples of how to identify and use RSI in day-to-day trading
Don't miss the next issue of ‘The Alpha Insight’ – your ultimate guide to NFTs on Solana. If you have any questions, comments, or requests, please don't hesitate to reach out to me on Twitter or Discord. I would love to hear from you and engage in meaningful conversations about NFT trading and investing on Solana.
Another amazing newsletter, I have learned so much and feel the confidence building to trade on secondary as the GOAT Sheen, thank you for this and looking forward to the next issue
Another amazing newsletter, I have learned so much and feel the confidence building to trade on secondary as the GOAT Sheen, thank you for this and looking forward to the next issue