Bitcoin: NOW At Wholesale Prices.
The 50K support area is now in play after a dramatic sell off and test of the 42K support, all in a matter of hours. This move supports the argument that Bitcoin is in a very broad consolidation which I have talked about the possibility of months ago. This type of dramatic move also offers a buying opportunity for position traders even though there is no technical reason for price to continue higher at the moment.
If you consider a weekly chart, you will see price has overlapped what could have been the Wave 1 of a broader 5. This overlap proves that the current price structure is not an impulse wave. Which means price is likely to be a wide consolidation which can fluctuate between the 30 and 60K area for a number of months, NOT rally to 100K. This situation is EXACTLY why I constantly remind my followers to FOCUS on RISK FIRST, not videos that promise that you will become a millionaire if you "buy these 3 alt coins NOW!".
The reason why this move occurred is irrelevant because the price structure tells a much more important and actionable story. The price action that took place before this move never confirmed a clear reason to buy and the potential scenarios that I outlined in my previous analysis never developed. While I was looking for longs in the low 50K area, MY RULES kept me OUT OF THIS MOVE.
As far as a buying opportunity, for position traders (investors) this is a good time. The idea behind a position trade is to buy inventory (purchase wholesale, sell retail). Prices between 30 and 50K are wholesale prices. Inventory has less to do with timing and more to do with sizing. I have explained this concept numerous times during my streams. You don't put your entire investment into the market at one price, you split it into smaller "batches" and make your smaller purchase once or twice per month until you have reached the full amount of what you had planned to invest. IF Bitcoin retests the low 40Ks or lower, you will achieve a much more attractive average price. Keep in mind, when playing this game, it is VERY important to stick to your original allocation because you need to protect against the possibility that Bitcoin can go to unexpected prices like 20K. You should also AVOID using any leverage or margin when carrying inventory.
What about swing trades or shorts? I don't short Bitcoin for swing trades and I am certainly NOT going to start near lows. The 45 to 50K area is attractive for swing trade longs BUT after this magnitude of bearish momentum, price will have to prove stability first. This process can unfold in the form of a double bottom, etc. and it can take WEEKS.
Is the trend bearish now? Relative to the bullish structure off of the 30K support, the larger time frame trend is NOT bearish. Price will have to take out 30K and possibly even 20K for me to be convinced that the "trend" is bearish. Trends persist for long periods of time, while corrective moves or "bearish momentum" are temporary. Situations like this (especially with lots of drama and bearish "news") lure the reactive herd into shorting. Where were you at 69K when the risk of retrace was at an extreme?
Important contrarian lesson: About a month and a half ago, there were signs EVERYWHERE that Bitcoin and the entire alt coin space were at a PEAK. Public forums like Youtube had an overwhelming number of videos that had "millionaires" in their titles. There were billboards in my local area advertising to buy Bitcoin now. There were reports of advertisements in major cities around the world for Bitcoin. High quality opportunities are NOT OBVIOUS and are NOT ADVERTISED anywhere. This concept is the same as when the "shoe shine boy" or your dentist offers stock tips. The population of active participants that were buying have all bought and there is no one left to buy. Use public information to your advantage. Betting against the public is what professional speculators, fund managers, retail prop firms, forex dealers and casinos do on a regular basis.
Many are going to be caught in this and it is the result of succumbing to the fear of missing out. Many people asked me over and over about the alt coins and I would say wait. Many people criticized me for being too conservative. All I know is I'm not caught in this because I recognized the risks and was not willing to accept them. Trade rules, otherwise get stuck in "hope mode" which is not a strategy.
Thank you for considering my analysis and perspective. I hope you find it helpful.
If you consider a weekly chart, you will see price has overlapped what could have been the Wave 1 of a broader 5. This overlap proves that the current price structure is not an impulse wave. Which means price is likely to be a wide consolidation which can fluctuate between the 30 and 60K area for a number of months, NOT rally to 100K. This situation is EXACTLY why I constantly remind my followers to FOCUS on RISK FIRST, not videos that promise that you will become a millionaire if you "buy these 3 alt coins NOW!".
The reason why this move occurred is irrelevant because the price structure tells a much more important and actionable story. The price action that took place before this move never confirmed a clear reason to buy and the potential scenarios that I outlined in my previous analysis never developed. While I was looking for longs in the low 50K area, MY RULES kept me OUT OF THIS MOVE.
As far as a buying opportunity, for position traders (investors) this is a good time. The idea behind a position trade is to buy inventory (purchase wholesale, sell retail). Prices between 30 and 50K are wholesale prices. Inventory has less to do with timing and more to do with sizing. I have explained this concept numerous times during my streams. You don't put your entire investment into the market at one price, you split it into smaller "batches" and make your smaller purchase once or twice per month until you have reached the full amount of what you had planned to invest. IF Bitcoin retests the low 40Ks or lower, you will achieve a much more attractive average price. Keep in mind, when playing this game, it is VERY important to stick to your original allocation because you need to protect against the possibility that Bitcoin can go to unexpected prices like 20K. You should also AVOID using any leverage or margin when carrying inventory.
What about swing trades or shorts? I don't short Bitcoin for swing trades and I am certainly NOT going to start near lows. The 45 to 50K area is attractive for swing trade longs BUT after this magnitude of bearish momentum, price will have to prove stability first. This process can unfold in the form of a double bottom, etc. and it can take WEEKS.
Is the trend bearish now? Relative to the bullish structure off of the 30K support, the larger time frame trend is NOT bearish. Price will have to take out 30K and possibly even 20K for me to be convinced that the "trend" is bearish. Trends persist for long periods of time, while corrective moves or "bearish momentum" are temporary. Situations like this (especially with lots of drama and bearish "news") lure the reactive herd into shorting. Where were you at 69K when the risk of retrace was at an extreme?
Important contrarian lesson: About a month and a half ago, there were signs EVERYWHERE that Bitcoin and the entire alt coin space were at a PEAK. Public forums like Youtube had an overwhelming number of videos that had "millionaires" in their titles. There were billboards in my local area advertising to buy Bitcoin now. There were reports of advertisements in major cities around the world for Bitcoin. High quality opportunities are NOT OBVIOUS and are NOT ADVERTISED anywhere. This concept is the same as when the "shoe shine boy" or your dentist offers stock tips. The population of active participants that were buying have all bought and there is no one left to buy. Use public information to your advantage. Betting against the public is what professional speculators, fund managers, retail prop firms, forex dealers and casinos do on a regular basis.
Many are going to be caught in this and it is the result of succumbing to the fear of missing out. Many people asked me over and over about the alt coins and I would say wait. Many people criticized me for being too conservative. All I know is I'm not caught in this because I recognized the risks and was not willing to accept them. Trade rules, otherwise get stuck in "hope mode" which is not a strategy.
Thank you for considering my analysis and perspective. I hope you find it helpful.
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