Thank You Bitcoin Bears. New Buy Signal Can See Break Of 8500.
Bitcoin has established a new buy signal in the form of an outside bar which may be the beginning of the next leg higher. This video serves as an update to my previous written analysis where I wrote, "A close above 7600, followed by 7950 is likely to stimulate a flurry of margin liquidations (shorts following their small time frame charts who are now caught). This buying pressure, along with break out buyers can take price to 8500 or even the low 9Ks in a matter of hours."
In this update I will answer the question, "Is this the retrace to buy into?" and further explain our rationale for positioning TWO WEEKS in advance of the dramatic short squeeze (hint: it is all about understanding probabilities and has nothing to do with logic or news). I realize some community members prefer shorter videos, but I am including the main points here so that you get the idea without having to watch the entire thing.
1. The recent short squeeze was the outcome of a strong catalyst, BUT Bitcoin has been in a position to rally for MONTHS. The patterns that developed as a result of order flow around a particular LOCATION favored LONGS the entire time. Small time frames will blind you to this important context.
2. The 7600 minor support has held and a new higher low is about to be established. Higher lows often lead to higher highs, and there is now a bullish outside bar which can be interpreted as a new buy signal for a swing trade long. The next high is likely to be above the 8500 resistance.
3. Our swing trade from 7250 (taken almost 2 weeks ago) has reached 2 out of 3 profit targets. This means we are only long 1/3 of our original position. This also means price can go below our entry of 7250, and our trade will still be in the green. This is how we define a STRONG HAND. This is the result of positioning based on probabilities, not reacting to news, opinions or random lines on the lower region of a chart.
Capturing short term moves in Bitcoin, just like any other market requires advance positioning. Reacting to news events, drama, and other stimuli is what leads to losing trades. Logic is NOT your friend in financial markets because randomness is high and we will always be competing against VERY LARGE players who will ALWAYS have better information than we do (hint: the CEO of Coinbase, or any other participants at his level are NOT analyzing the RSI on one hour charts to maneuver their capital). See the charts for what they are: a way to gather clues of market intent, construct relative probabilities, and to define risk proportionally to your personal capacity. There is enough information on a chart to make informed decisions, it's just that most traders and investors are not able to recognize it and instead rely on instinct, logic, and backward looking oscillators.
In this update I will answer the question, "Is this the retrace to buy into?" and further explain our rationale for positioning TWO WEEKS in advance of the dramatic short squeeze (hint: it is all about understanding probabilities and has nothing to do with logic or news). I realize some community members prefer shorter videos, but I am including the main points here so that you get the idea without having to watch the entire thing.
1. The recent short squeeze was the outcome of a strong catalyst, BUT Bitcoin has been in a position to rally for MONTHS. The patterns that developed as a result of order flow around a particular LOCATION favored LONGS the entire time. Small time frames will blind you to this important context.
2. The 7600 minor support has held and a new higher low is about to be established. Higher lows often lead to higher highs, and there is now a bullish outside bar which can be interpreted as a new buy signal for a swing trade long. The next high is likely to be above the 8500 resistance.
3. Our swing trade from 7250 (taken almost 2 weeks ago) has reached 2 out of 3 profit targets. This means we are only long 1/3 of our original position. This also means price can go below our entry of 7250, and our trade will still be in the green. This is how we define a STRONG HAND. This is the result of positioning based on probabilities, not reacting to news, opinions or random lines on the lower region of a chart.
Capturing short term moves in Bitcoin, just like any other market requires advance positioning. Reacting to news events, drama, and other stimuli is what leads to losing trades. Logic is NOT your friend in financial markets because randomness is high and we will always be competing against VERY LARGE players who will ALWAYS have better information than we do (hint: the CEO of Coinbase, or any other participants at his level are NOT analyzing the RSI on one hour charts to maneuver their capital). See the charts for what they are: a way to gather clues of market intent, construct relative probabilities, and to define risk proportionally to your personal capacity. There is enough information on a chart to make informed decisions, it's just that most traders and investors are not able to recognize it and instead rely on instinct, logic, and backward looking oscillators.
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