There are several counts that I have seen that are viable for the last couple of days, this chart is one of them. Assuming we had a close of our 5th wave on the bullish impulse, we are now going through an ABC correction. When we hit the channel support, at what could be the close of "C", BTC has an important decision to make. Though the 4-hour RSI broke down on its wedge, right now the 1-Day RSI is at a critical support moment. This for me is a huge No Trade Zone. I am going to wait for a confirmation close indicating whether BTC bounces up off of this correction or continues down.
Be careful in moments like this. it is a perfect chance for emotional bias to cause you to enter into a trade with a very bad risk/reward scenario. Whether it goes up or down I don't particularly care, but I know I am going to wait to find out. One fun way to cut down o the emotional side of trading is realizing that you can make just as much money if this bounces between 6k and 10k indefinitely as you can if this gradually climbs to 20k. With the current volatility of this market, you really won't "miss out" on a way that ruins your chance to do really well.
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We hit our "C" target dead on and saw a momentary pull back. That pull back is not the substantial confirmation we are looking for as a sign of reversal. This can easily continue down from here, so I am not anymore ready to pull a trade trigger now than I was an hour ago. Let's continue to wait to see how this pans out.
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So for me, confirmation means a means a potential close of wave 2 or what could be a "B". Both wave 2's and "B's" typically retrace between 50% and 61.8% of wave 1 (or "A") and often extend to a 1.62% of the height of wave 1 or "A". What that means is that, assuming you were able to buy in at the exact low point, you are giving up .50 or .382 of the height of wave 1 for a massively greater likelihood of a winning trade. I will pass up .382 of the height of 1 to have a 10 times greater likelihood of making the right call every chance I get. It gives you the confidence to go in with a decent portfolio play. Depending on the nature of wave 1 and the close of 2, you can often set a stop/loss all the way at the open of wave 1 and your 1.62 ext target still gives you a 4.6 risk/return ratio.
I am not saying this is the right set-up for everyone, nor am I suggesting that anyone change something that is already working for them. I just thought I would should how I set up precarious, scenarios such as this one, in a way that lets me end up with more money afterwards rather than less. Fair warning, its better than shooting from the hip, but you do get stopped out on occasion. Nothing is 100% bullet proof, but it has a good track record for me so far.
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Getting resistance from the 55 EMA:
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Stopped out for a .48% loss. All good. The upside was a 2.1% gain. That means that you could have 4 out 5 wave 2's (or "B") fail and still be over break even. If you wait for some form of confirmation there is no reason the portfolio doesn't grow overtime. This was about as precarious of a spot as you can get and I played it because the last couple of days have treated me well and I took a chance to play a decent upside with a .5% loss at stake. Now my eyes are open for the next opportunity that meets my risk/reward criteria. For now we are in a no trade zone in my book.
Thanks for your work. What's your opinion on this bullish view?
MDuth
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@GabrielVasile, Way to go building this and putting yourself out there. Best way to learn is to start throwing down TA, watching things play-out and learning from what worked and what didn't. The set-up makes sense, the red-flag that I see is the breach of the .618 retracement of your wave 1. Sometimes wicks can extend slightly beyond our fib target, but we had a 1-hour close at 8170. It doesn't completely invalidate the count, but I would be looking at additional counts as viable options. So many people get their heart set on a particular narrative and follow it come "hell or high-water". Have multiple counts and options and be unattached as to which one you want to be true. As more data comes in you can gradually narrow down the most likely scenario. The shorter the time-frame often equals the easier to invalidate or confirm. Again, love the thought that went into it and lets see if it plays out. Keep those charts coming :)
@CryptoTANewb, I see what you saying. Be careful with the ol' H&S pattern. It gets thrown around way too much. People will find a "H&S pattern" where the left shoulder is 2X the height of the head and the right shoulder somehow finishes below the neck line. You could be totally right, just beware that a H&S pattern is easy to falsely create...especially in a moment where you really want to see a reversal ;)
MDuth
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So for me, confirmation means a means a potential close of wave 2 or what could be a "B". Both wave 2's and "B's" typically retrace between 50% and 61.8% of wave 1 (or "A") and often extend to a 1.62% of the height of wave 1 or "A". What that means is that, assuming you were able to buy in at the exact low point, you are giving up .50 or .382 of the height of wave 1 for a massively greater likelihood of a winning trade. I will pass up .382 of the height of 1 to have a 10 times greater likelihood of making the right call every chance I get. It gives you the confidence to go in with a decent portfolio play. Depending on the nature of wave 1 and the close of 2, you can often set a stop/loss all the way at the open of wave 1 and your 1.62 ext target still gives you a 4.6 risk/return ratio.
I am not saying this is the right set-up for everyone, nor am I suggesting that anyone change something that is already working for them. I just thought I would should how I set up precarious, scenarios such as this one, in a way that lets me end up with more money afterwards rather than less. Fair warning, its better than shooting from the hip, but you do get stopped out on occasion. Nothing is 100% bullet proof, but it has a good track record for me so far.
hiddenpablo
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Agree to that and after that I see bigger possibility for further rise (10k - 12K).
MDuth
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@hiddenpablo, are you referring to the more macro potential bullish structure that starts around 6500ish and closed the 2nd at 7930ish?
hiddenpablo
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@MDuth, Yep, also take a look on a long term line 3k - 6k (linear scale).