Bitcoin: 25K Support Vulnerable.
Lower highs often lead to lower lows. If 25K is cleared on Bitcoin, 22K becomes the next relevant support area. Situations like this can be very confusing, but in this article I will explain the mental framework I utilize to effectively shape expectations and manage risk when facing technical conflicts.
First we must ALWAYS accept the fact that markets are MOSTLY RANDOM. I do NOT expect to "forecast" a market which implies a degree of certainty. Instead I attempt to assign loose probabilities to scenarios based upon clues that are present on the chart.
The confusion comes in when price is flirting with a major support while bearish short term momentum continues to persist. It is easy to obsess over the support and believe it will not break because the broader structure is bullish. The thing is, price should not linger too long at the support if the market is in fact strong. Momentum reversal setups should follow through, NOT establish lower highs (see blue squares).
The fact that price has attempted to squeeze twice and has failed within a major support area implies weakness. I have found it is better to anticipate momentum will continue until proven otherwise. To prove otherwise in this situation, a resistance needs to be taken out, like 27K to 28K area OR at LEAST a higher low formation. All we have is persistent tests of support.
If this price action does not change, it implies that a support break is more likely which can lead to a test of the 22K area in the next week or two. This is NOT a forecast, it is a scenario that carries a greater probability and shapes my expectations for trade strategies.
For example, I recently called a swing trade long at 26,200 which filled. While the trade has not gone to the stop, chances are it will and why I am calling for an early exit. Meanwhile my trade scanner (automated system) has been calling shorts the entire time. It's most recent short on Bitcoin was called at 25,985 and is still in play. The system follows momentum while I consider a broader context. Which is better?
While the bot can get caught at times because it can't see context, it has been outperforming me because it follows its rules without exception. It is not perfect, but it takes emotions out of the game and improves performance efficiency dramatically especially for a trader with little to no experience. The best case is when you can recognize context and use that to better shape your expectations for the automated signals.
In the Bitcoin situation shorting into a major support should be considered high risk, even though it can work. Knowing this, you can trade smaller, expect less or avoid the signal completely. Success is not defined by profits, it is defined by how you measure and take risks.
Thank you for considering my analysis and perspective.
First we must ALWAYS accept the fact that markets are MOSTLY RANDOM. I do NOT expect to "forecast" a market which implies a degree of certainty. Instead I attempt to assign loose probabilities to scenarios based upon clues that are present on the chart.
The confusion comes in when price is flirting with a major support while bearish short term momentum continues to persist. It is easy to obsess over the support and believe it will not break because the broader structure is bullish. The thing is, price should not linger too long at the support if the market is in fact strong. Momentum reversal setups should follow through, NOT establish lower highs (see blue squares).
The fact that price has attempted to squeeze twice and has failed within a major support area implies weakness. I have found it is better to anticipate momentum will continue until proven otherwise. To prove otherwise in this situation, a resistance needs to be taken out, like 27K to 28K area OR at LEAST a higher low formation. All we have is persistent tests of support.
If this price action does not change, it implies that a support break is more likely which can lead to a test of the 22K area in the next week or two. This is NOT a forecast, it is a scenario that carries a greater probability and shapes my expectations for trade strategies.
For example, I recently called a swing trade long at 26,200 which filled. While the trade has not gone to the stop, chances are it will and why I am calling for an early exit. Meanwhile my trade scanner (automated system) has been calling shorts the entire time. It's most recent short on Bitcoin was called at 25,985 and is still in play. The system follows momentum while I consider a broader context. Which is better?
While the bot can get caught at times because it can't see context, it has been outperforming me because it follows its rules without exception. It is not perfect, but it takes emotions out of the game and improves performance efficiency dramatically especially for a trader with little to no experience. The best case is when you can recognize context and use that to better shape your expectations for the automated signals.
In the Bitcoin situation shorting into a major support should be considered high risk, even though it can work. Knowing this, you can trade smaller, expect less or avoid the signal completely. Success is not defined by profits, it is defined by how you measure and take risks.
Thank you for considering my analysis and perspective.
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