BTCUSD update: 11600 resistance taken out indicates bullish momentum returning while this market can be setting up for a broader move back to the 14211 to 15525 resistance area. If you are not long yet, the retrace to watch for is the 10242 to 9822 minor support zone.
In my previous report, I wrote about the outside bar like formation (it wasn't an outside bar exactly, but it had the same effect). This served as a helpful indication that price was most likely on its way higher and since it was coming from an overlap of key support levels, it was a good place to consider position trade longs.
Now that price is attempting to push through the old support/new resistance of the 11600 level, it can be preparing to establish a momentum reversal structure such as a higher low. The price area that I am watching for is the 10242 to 9822 zone which is a minor .618 support area relevant to the recent bullish retrace. It is also just above the 9683 boundary of the reversal zone where price established a swing low.
If price can retest and reverse off of this minor support, that would be a signal for a swing trade long. If you are not long yet, this scenario offers an attractive area to establish such a position because the risk can be clearly defined by 9683 and potential target around the 14211 to 15525 zone. IF price fails to make a new low, that would present a sign of stability and increase the chances of higher prices in the near future.
I have been long and will add if the higher low unfolds. Also IF the market offers the opportunity, I plan to lock in SOME profits in the mid to higher 14KS. For those who have been reading my reports for some time, I hope it is now clear why I also emphasize locking in some profits while you can. This is what a more normal trading environment is like, not that unrealistic non stop new highs that we saw weeks ago.
Can price still fall apart? Sure, anything can happen and that is why we must always consider risk and manage it through stops and proper position sizing. The sign that would negate my bullish scenario is a break of the 9683 low without any immediate recovery or failed low price action. I believe this scenario is much less likely, BUT if it happens, at least take measures to protect yourself.
In summary, one of the best lessons you can take away from the recent correction is when the market offers profits, TAKE some and wait for the next correction. Like I wrote weeks ago, vertical markets breed bad habits. Warped expectations and gut feel trading only lead to trouble. When corrections like this happen, and they always do, they shake out all the participants who had no sense of risk, or plan and were consumed by their greed. Greed and fear are at the forefront of the herd mentality, and the first step to separating yourself from that is to structure your investment and decision making process. Current market conditions are more realistic and require skill to navigate, and skill is not about what indicator to put on your chart. It is about structuring your thought process in a way that allows you to recognize and interpret market risk and potential. Buying supports in broader bullish markets and selling near resistance levels is a simple and effective best practice, but you have to put your greed and fear aside in order achieve better results consistently.
I would appreciate your thoughts on the following. Successfully timing the markets is EXTREMELY DIFFICULT for most investors. Is there not an argument for simply taking a position and leaving it for the long term, rather than trying to assess when to get out and when to get back in? If BTC now rallies back to 15K and investors take out profits, but then continues to surge to 25K+ unless the market corrects more than 40% the profits left on the table will only be able to buy in at prices higher than he took profits? I think many traders are getting burnt now with this high volatility, trying to sell and then buy back in at a more 'favorable' price.
rmrezai
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@elikay770, there is no value in this space. Thats why most people are not longterm. 3 trasactions per second. Common. When was the last time you went shopping with BTC?
obsess
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@rmrezai, I bought about 4k worth of graphics cards on newegg a few weeks ago and payed in btc no problem. The only issue was it took a few minutes for a confirmation email and was pretty painless overall. In a few months when lightning network matures this will only improve.
RANDYGLASS53
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@elikay770, Totally agree with what you are saying here.....
whoisthelorax
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Isnt this a bear flag on btc right now?
sjolles
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Brilliant post!
andrewpomerans
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Thank you for the strategy insight, I appreciate the time you take to write your posts. While reading this, it dawned on me that I AM trading with the herd, making orders based on greed and fear, and so far that cost me. Now I'm making the effort to stick to your strategy (since mine sucks)
afterforever
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@andrewpomerans, If a herd takes you to the wolves, what makes you think that sheep herder won't take you to a slaughter house? How about using your head when investing. Oh, here's how; 1 hr chart = no trend, 4 hour chart = no trend, 12 hour chat = downtrend, 1d chart = downtrend to a lesser extent.
So, here's the tip; don't buy or sell against the trend or no trend.
Also, there's absolutely no frigging evidence it is going back to 15k. There is no evidence that it is going down to 8k either. You wouldn't go to a fortune teller, so why listen to somebody who can draw kinda ugly boxes on the screen?