MarcPMarkets

BTCUSD: Don't Pick The Bottom, Let The Market.

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD             update: Bearish momentum is driving price toward 6K support as this market pushes through the 6805 reversal zone boundary. Remember there is no way to pick a bottom in a situation like this. The best we can do is estimate where a reversal is likely and let the market prove itself. If the market continues to stay weak, it can go as low as 4559 before reversing. This is where risk management comes into play.

I keep getting questions about why I am not shorting this market. The quick answer is I refuse to trade these markets on margin so technically, I can't short these markets. Even if I wanted to, I would only look for opportunities on a day trade basis because the risk of a short squeeze is way too high to hold on at these levels. As I have written before, this situation is no different than when this market was pushing extreme highs. I don't buy highs and I don't short lows.

I have been writing about the 8171 to 4983 support zone (.618 of entire bullish structure) for weeks. As long as price stays within this broad zone, I am either looking for signals to add to my position, take shorter term swing trades long or just wait until bullish confirmation returns. I am not going to sell anything at these levels unless I am getting stopped out of a predetermined swing trade.

The more conservative thing to do is wait for a reversal to confirm and the scenario that will validate this for me is a close above the 7492 level (.382 of recent bearish swing). This event would indicate there are enough buyers to compromise the immediate bearish trend line . It does not mean this market will go straight up, it simply means momentum is beginning to change. The next step from there would be a higher low formation.

In summary, whether this market decides to bottom at the current level, or reverse at 6K, the conservative thing to do is wait it out and let it choose. The only way I would be buying at the current level, is if I had no position at all which is not the case. And that is where risk management comes in. I have enough of a position where if this market keeps going lower, it won't be pleasant, but I will not get shaken out. The only way I will add to this position trade is by waiting for conservative scenarios like closing above a bearish trend line . Overall, as ugly as it looks, 6K is still holding up and can be the bottoming formation that establishes a broad Wave 2 (find the weekly BTC             chart on the S.C. site for more on that).

Questions and comments welcome.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| http://www.Priceactiontraders.net | Cofounder http://www.seekingcryptos.com (S.C.)






In summary, whether this market decides to bottom at the current level, or reverse at 6K, the conservative thing to do is wait it out and let it choose. The only way I would be buying at the current level, is if I had no position at all which is not the case.
And that is where risk management comes in....good luck with that - hasn't worked too well so far in 2018 though.
Alternative strategy For more experienced traders only


+1 Reply
Incorrect.
+1 Reply
This quote is why I just dont get your philosophy to be an "investor" in a traders market
"If you are a trader, you love volatility. You need things to move around a lot, so you can buy low and sell high, and buy low and sell high, and do it over and over again. This seems obvious.
What is less obvious is that if you are an investor, volatility works against you. As an investor, time works in your favor, so your investments compound.
And as we all know, time and volatility work in opposite directions. Volatility is bad for investors, because it increases the likelihood that you will be shaken out of a position and your returns will stop compounding." (Jared Dillian)
+1 Reply
I think we are near a local bottom on the daily chart...one more downward mvmt/wave on the 1h chart (which for bitcoin could be to 6600 or lower), and I think one would be safe taking a long position. I'll cross that bridge when I come to it though, for now we're not there.
+1 Reply
There's the short squeeze.
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“4th Dimension: Bitcoin-Manipulation-Cartel — Price-Suppression is their Goal” https://medium.com/@super.crypto1/4th-dimension-bitcoin-manipulation-cartel-can-it-be-burnt-no-way-c53de65c166a
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Technically, now that you have a long term position, you are able to take short swing without using margin. No need to continue to say that you won t short this market because of margin.
+2 Reply
@rudius, lol ouch...
+2 Reply
@rudius, selling to buy back lower isn't shorting.
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rudius Emphase
@Emphase, yes it is. Different time frame is all.
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