Finding Clarity through the Profit HazeHello fellow Traders,
We are looking at the BLX chart on the Weekly to establish a long term directional bias for Bitcoin. I trade using David Halsey's Measured Move trading system. While this system is just Fibonacci retracements, the "special sauce" behind this system is how the pivots are chosen for those Fibonacci retracements. This system has a self-referential, fractalizing nature about it. I will defer to DH for any further Measured Move teachings at his website (www.eminiaddict.com).
To give some historical perspective, applying the Measured Move (MM for short) system to the BLX chart in Log scale, we can find a clear "market footprint" to base our analysis off of. On the left, we have the first Traditional MM (Low to High) which price goes blasting through the first Profit Target during Bitcoin's 1st bull market marked by the 1st red arrow. When price goes through the Target, the Traditional MM turns into an Extension MM (high of Trad to high after meeting Target) which also met it's Target in Bitcoin's 2nd bull market. With our current bull market, we are actually in an Expanded Extension (which gives an MM trader like me the goosebumps, it's a very bullish sentiment) and we have, in recent weeks, met that Target of ~$38,500. SO, what do we do here? Let's assume you haven't taken profits just yet because you believe there is more upside potential. That brings us to something I want you to pay attention to...
Looking at Bitcoin's 2nd bull market, when Bitcoin reversed at the Profit Target (~$2720) of the 1st Extension MM, this gave MM traders the only opportunity we have for a Trailing Stop Loss. That is to place your Stop at the Stop Loss of the new Extension MM. That may sound confusing, but please refer to the chart text to get some clarity.
Why is this important and something to take note of?
BECAUSE WE ARE IN THE EXACT SAME SCENARIO RIGHT NOW
Let's remember that in our current bull market, the profit target was ~$38,550. We MET the Target so that allows us MM traders to employ that only opportunity for a Trailing Stop Loss. What happened in Bitcoin's 2nd bull market? We were able to use the Trailing Stop to increase the upside profits by multiple fold.
Coming back to the present, and to try to keep the rest of this clear and concise, according to the trading system, there is 1 of 2 things that can happen...
Bitcoin either...
1. Reaches the MM Extension's Profit Target of ~$50,000. (more probable)
OR
2. Breaks the MM Extension at ~$24,550. (less probable, but still possible)
Until either one of those events happen, we are forced to play the waiting game.
Let's not forget that the possibility of us breaking the Extension MM is still real. So we must prepare for that as well and with that being said...
IF, Bitcoin breaks the Extension MM at ~$24,550, THEN I will be expecting a large correction and will be placing buy limit orders at the $4.5k - $ 7k range.
Again, I'm not putting my money on the Extension MM breaking (hell, I'm as long as can be), but I won't be ignorant to the possibilities that lie if I am wrong in this moment.
Thanks so much for reading!
Happy Trading
- Smiley
P.S. - this is my very first post and I hope to receive some feedback on how to better express my ideas. Don't be afraid to leave any suggestions! Thanks again.
