BTCUSD: Break Of 14400 Can Lead To 16350 Resistance Retest.

BTCUSD update: The 16350 resistance zone stays intact while price retests 13145 which is within a minor support zone . Is this a good retrace to buy? Let's consider the scenarios.

First, price has held the 13269 to 12581 support zone which is the .618 area relative to the recent bullish swing. At the moment price action is consolidating just above which can unfold in two formations that are worth considering.

When I refer to consolidation I am referring to an inside bar formation, or a series of dojis. In the current configuration, price may be forming a mini symmetrical triangle if the current candle closes the way it looks at the time of this writing. Triangles are continuation patterns and the appearance of one in this position is likely to lead to a continuation of the bearish momentum which can take prices into the minor support area below, or even through it. This scenario could see price retesting the 11600 low for a potential triple bottom formation. I would rather look to buy there than here.

The appearance of a small bear flag can also unfold here which is more likely to lead to lower prices rather than higher. These bearish scenarios are contingent on the 14400 minor resistance level staying intact (.382 of current bearish swing).

The signal that price is more likely on its way back toward the 16350 to 17876 area is a decisive break above the 14400 level meaning price needs to close above the level and on the high of the period.

So in terms of taking a position, this level is a tough call because there is no clear signal or formation calling for a long, but price is fluctuating between a minor support area and resistance level .

This is where your risk tolerance and trading plan have to come together to make the trading decision. From the perspective of my trading plan, the reward/risk is attractive since the 13145 low can be used as a reference point, compared to the nearest target which is the 16350 area. The problem is reward/risk is not the only factor that goes into a trade decision. My plan requires some form of confirmation which is missing at the moment and does not offer any special bias in my favor.

From the investor perspective, this is a swing low which simply offers a better opportunity than buying at a swing high. If sized appropriately (according to your plan) you won't be seriously affected IF price decides to test the 10K level or lower. That just becomes another buying opportunity. Precision is not required for this method because you are using position sizing without margin to average in. As long as you believe in the long term viability of this coin, and are willing to lose your investment, then this strategy is the less complicated of the two.

Keep in mind if you are using another exchange like Coinbase or any other where price is not the same, you have to translate the prices from this chart to your own chart. The formations will be the same, even if the prices are not.

In summary, I laid out the details of what to consider while price is fluctuating within an attractive reward/risk area without momentum confirmation. Risk/reward is not the only factor that goes into making a swing trade decision according to MY plan and is why I will not take a swing trade long here. Based on the momentum, I think price can retest lower levels and I am willing to wait for that possibility before taking a longer term position. Again YOU must decide what you are comfortable with, I cannot make that decision for you. If you are depending on the analysis of other people for outright buy and sell decisions, in the long run you will be subject to a random outcome. You might as well flip a coin.

Comments and questions welcome.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| | Cofounder (S.C.)

Great!! I agreee with your trading psychology and patience for wait the safe scenario to enter it.

Great analysis Marc, spot on
It looks like it broke the 14400 resistant.
I had been day-trading between resistant and support, saw the strong break just now so will hold my coins for the next resistant
videoorchard EtherSwinger
@EtherSwinger, Are we on a bullish run here? Wanted to buy at 8-10k ish.
EtherSwinger videoorchard
@videoorchard, I think it's reasonable to see price in the mid 13 to low 14K before the bull takes over completely.... my gut tells me that the 9-10K range won't happen
it my go like that
+1 回覆
Nicely stated!
+3 回覆
If price retest the 10k level or lower would be awesome from my long term investment perspective.
Thanks Marc.
+2 回覆
I greatly appreciate your analysis and agree with it. Thanks for taking the time to share this with us.
I love this article especially "The problem is reward/risk is not the only factor that goes into a trade decision. My plan requires some form of confirmation which is missing at the moment and does not offer any special bias in my favor. "

Expected profit = Average Winning Ratio * ( Reward / Risk )
Confirmation increases the odds for winning especially when price move between minor and weak support / resistant levels.
+1 回覆
Great article Marc, thanks for your analysis.
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