Bitcoin: Trounce Or Coming Bounce?
Updated
A Bitcoin sell off does not always mean it is trending, it is all a matter of perspective. If you focus on one hour charts, you will see a trend, but what happens when price reaches a level that carries greater weight in terms of support? We regularly remind our followers that it is the probability of location that serves as the best guide.
We shared a long signal that triggered at 10,435 and let the market play out for 3 weeks until the trade eventually got stopped out at 9430. For those who do not realize yet, losing is part of this game. When I was a beginner, I hated losing and used to make the mistake of letting my performance determine the value of my self worth. Back then, a colleague of mine used to always remind me that in order to win, you have to be able and willing to lose. It took years for me to fully appreciate those wise words. If you can't lose, you can NEVER win. Losing provides opportunities to develop, improve and grow if your level of emotional intelligence brings them to light. Over time these opportunities will lead to experience that will contribute to developing a personal process.
We follow a process that allows us to make the best use of our time and attention while participating in broader movements when the market cooperates. In other words, once the criteria lines up, and we are triggered into a trade, it is up to the MARKET from there. We DO NOT react to noise, over think or second guess. As long as our risk is defined, it is up to the market to do the rest OR take our payment.
Many may be over reacting to the bearish movement from 10,300 to the 9300 area and assuming a trend. They will use trend following strategies, while over looking the fact that Bitcoin is still gyrating within a broad range (14K high to 9K low). Since price has not made any progress outside of this range, we continue to view it as a consolidation UNTIL it proves otherwise. Proof will have to come in the form of a break out, either below 9K or above 14K. We don't predict, we adjust and prepare.
Since we strongly consider the probability of location, current price is fluctuating around the 9500 region which is an area to look for bullish reversals. Although there is nothing at the moment, there is a greater chance one will appear. Can price break lower? ANYTHING CAN HAPPEN. We evaluate favorable probabilities, which also means there is a chance they do not play out. That is why we predetermine our risk with a stop (when enough criteria is met to justify a trade).
What if price breaks lower? The 9K area is the extreme support where a fake out can most likely occur. We trade the long side only, so this is an error that we automatically avoid, but many will get sucked in. IF price can clear 9K decisively, ONLY then will we consider the 8500 support level in play. For our investment strategy (SEPARATE from swing trades), the 9K to 8500 area is attractive when it comes to accumulating more inventory.
In summary, Bitcoin is fluctuating around the lower region of a broad range, it is NOT trending on the degree to which we place the most weight on. For our swing trade strategy, this means the probability of the location favors long setups. We make every effort to remove ourselves from the equation and let the MARKET determine when to enter and exit a trade. Reacting is what often leads to errors and losses compared to letting the market present and trigger a trade idea.
What are your rules? How do you define a market that is in a trend? Or in a range? How do you measure your risk and reward relative to the current price structure? If you can't answer these questions clearly and decisively, then you should not be risking real money. Most new traders and investors come to this arena focused on profit, and overlook the value of consistency. Risk is the only variable we can truly control which is why our process begins with a defensive mindset. This is why we can be right less than 50% of the time, yet still produce a positive return overall.
We shared a long signal that triggered at 10,435 and let the market play out for 3 weeks until the trade eventually got stopped out at 9430. For those who do not realize yet, losing is part of this game. When I was a beginner, I hated losing and used to make the mistake of letting my performance determine the value of my self worth. Back then, a colleague of mine used to always remind me that in order to win, you have to be able and willing to lose. It took years for me to fully appreciate those wise words. If you can't lose, you can NEVER win. Losing provides opportunities to develop, improve and grow if your level of emotional intelligence brings them to light. Over time these opportunities will lead to experience that will contribute to developing a personal process.
We follow a process that allows us to make the best use of our time and attention while participating in broader movements when the market cooperates. In other words, once the criteria lines up, and we are triggered into a trade, it is up to the MARKET from there. We DO NOT react to noise, over think or second guess. As long as our risk is defined, it is up to the market to do the rest OR take our payment.
Many may be over reacting to the bearish movement from 10,300 to the 9300 area and assuming a trend. They will use trend following strategies, while over looking the fact that Bitcoin is still gyrating within a broad range (14K high to 9K low). Since price has not made any progress outside of this range, we continue to view it as a consolidation UNTIL it proves otherwise. Proof will have to come in the form of a break out, either below 9K or above 14K. We don't predict, we adjust and prepare.
Since we strongly consider the probability of location, current price is fluctuating around the 9500 region which is an area to look for bullish reversals. Although there is nothing at the moment, there is a greater chance one will appear. Can price break lower? ANYTHING CAN HAPPEN. We evaluate favorable probabilities, which also means there is a chance they do not play out. That is why we predetermine our risk with a stop (when enough criteria is met to justify a trade).
What if price breaks lower? The 9K area is the extreme support where a fake out can most likely occur. We trade the long side only, so this is an error that we automatically avoid, but many will get sucked in. IF price can clear 9K decisively, ONLY then will we consider the 8500 support level in play. For our investment strategy (SEPARATE from swing trades), the 9K to 8500 area is attractive when it comes to accumulating more inventory.
In summary, Bitcoin is fluctuating around the lower region of a broad range, it is NOT trending on the degree to which we place the most weight on. For our swing trade strategy, this means the probability of the location favors long setups. We make every effort to remove ourselves from the equation and let the MARKET determine when to enter and exit a trade. Reacting is what often leads to errors and losses compared to letting the market present and trigger a trade idea.
What are your rules? How do you define a market that is in a trend? Or in a range? How do you measure your risk and reward relative to the current price structure? If you can't answer these questions clearly and decisively, then you should not be risking real money. Most new traders and investors come to this arena focused on profit, and overlook the value of consistency. Risk is the only variable we can truly control which is why our process begins with a defensive mindset. This is why we can be right less than 50% of the time, yet still produce a positive return overall.
Note
This is the trade idea we shared on Friday and again on Sunday. The blue dashed line is the buy trigger and the green dashed lines are the targets. We remove ourselves from the trade as much as possible. The market determines the outcome, not our feelings, opinions or impulses.
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