BitcoinShort
How Law of Gravity applies in chart reading
Updated
The Weekly and Daily chart provides a good big picture of where the price action is heading, may not be precise but the overall direction is there and that is important to a trader.
Unless you are intraday trader, then this big time frame might be of little or no use to you. But, if you prefer to have less heartache and want to avoid going in and out of the market, then this chart may be of some use to you.
Firstly, you can see the price action since late June till now has been going down in a descending channel, making LH and LL. Next, it also shows at least 6 times that the price action has broken the short term up move only to continue to slide down as it touches the upper channel.
With this in mind, you can tell with a greater degree of probability what is the chances that it would spike up from current price to 10,000 level? Not that it is not possible but the probability is lesser and it tends to behave within the channel until breakout.
In conclusion, either I wait out for it to complete the channel and buy at much much lower price (fulfilling the buy low, sell high principle to make profits) or I find opportunity to short it at lower time frame (go along the trend line - bearish)
It is like going to a casino and you have limited chips on hand. To bet on every game is not possible , thus you have to calculate which game would yield you a higher chance of winning. Is it indexes, commodities, forex or shares ?
Once you have better clarity, then you are in a better position not to be glued to your screen to monitor ceaselessly the price movement. Time and capital can be better deployed to better use that generates profits for you.
Unless you are intraday trader, then this big time frame might be of little or no use to you. But, if you prefer to have less heartache and want to avoid going in and out of the market, then this chart may be of some use to you.
Firstly, you can see the price action since late June till now has been going down in a descending channel, making LH and LL. Next, it also shows at least 6 times that the price action has broken the short term up move only to continue to slide down as it touches the upper channel.
With this in mind, you can tell with a greater degree of probability what is the chances that it would spike up from current price to 10,000 level? Not that it is not possible but the probability is lesser and it tends to behave within the channel until breakout.
In conclusion, either I wait out for it to complete the channel and buy at much much lower price (fulfilling the buy low, sell high principle to make profits) or I find opportunity to short it at lower time frame (go along the trend line - bearish)
It is like going to a casino and you have limited chips on hand. To bet on every game is not possible , thus you have to calculate which game would yield you a higher chance of winning. Is it indexes, commodities, forex or shares ?
Once you have better clarity, then you are in a better position not to be glued to your screen to monitor ceaselessly the price movement. Time and capital can be better deployed to better use that generates profits for you.
Note
Happy that it drops ? Not really as I am not holding any short position at the moment as I had better use of my capital deployment. What I am fearful is this has many traders suck into it , thinking it can become a overnight success or something. If you are holding and/or bleeding, unless you have strong holding power, let it go, i.e. sell it. Take the pain , nurse it and move on. Yes, I know it is painful and as humans, we want to avoid pain at all costs. But how deep it can fall is anyone guess.
Keep to the rules of trading, keep to your SL , no matter how you think the market may turn in your favour.
Note
after 2 weeks or so, the price action still resides within the channel and seems to be heading downwards as well. But as it gets nearer to the apex of the channel, the chance of a breakout is higher so need to watch the price action closely.Note
strong support found at 7002 area and it has rebounded quite strongly of late. Now it is facing resistance at 7700 and if it breaks above, we can expect it to revisit the 8000 level. Once it touches there, it might retrace as it is touching the channel line or continue to head up. Exciting time to watch !
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