11% profits were added to my investment portfolio after my last idea. Currently, I have roughly 39% long positions entered around $7,000, 12% at $7,700 and 49% in fiat.
In my recent idea, I told you $6,800 - $7,000 was my target for taking profits (orange box) due to the weekly resistance level. The resistance level was due to:
$6,800 is a resistance level to take profits on long positions, but it does not mean it was a good price level to short. I see many traders get confused between the two (close profits on long positions =\= time to open short positions).
Whenever you open a position you need to consider the risk reward to see whether it is worth the risk to open a trade. Let’s examine an example below. While both trades have identical Stop Loss and Target, the risk rewards are vastly different depending on the entries. One can give you only x1 gain while the other can give you x5 gain. So, would you take trade #1 or #2?
See, when you think logically everything starts to make sense.
Another problem with many traders is that they don’t have the patience to wait for the market to reach important support/resistance levels. They are desperate for actions and trade setups as they either have no patience or they believe trading frequently is the way to make money. Consequently, they always trade the dumb zone – the zone that has no significant support/resistance, low volatility and with a poor risk reward ratio.
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Market trend and cycle
On the 4th of July 2019, I explained it to you why I don’t think a new bull run has started and why I believe the market is trying to define its market range, probably between mid $5k and $16k. The market is still following the range for now. (click below chart & play)
I have also warned you that Bitcoin is in a transition phase (and, in a ranging market) which is extremely challenging to trade. Patience is critical during this market phase.
From the weekly timeframe, we can assume the market may consolidate for some time going forward (until either side is broken) because:
On the daily timeframe, undoubtedly the market is in a downtrend. Thus, from a swing trade perspective you should focus on shorting the market. Two price levels that I would be interested in shorting are:
1. Around $7,500 - $7,900 where the breakdown occurred on the 12th March. Looking at how the price reacts to this level is highly recommended.
2. $8,700, where the point of control is of the recent downward swing between $10,500 & $3,800. Stop loss should be set above $9,300.
However, bear in mind, the downtrend is invalidated only if price breaks above the recent swing high at $10,500. This means if price decides to break above $10,500 and starts a new bull-run, there is a chance that you might have just missed out on the biggest opportunity in your life.
You might be asking – “what should I do if I want to short the market but don’t want to miss the investment opportunity?” Simple, allocate part of your capitals for trading purposes and the other for investment purposes.
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**This post is for informational purpose only. I will not be held liable or responsible to you in any way for any loss or damage suffered by you through use or access to this post**
Past analysis (click & play):
Bitcoin, perfect call (300% profits)
Entered $8450, sold around $9,800 (16% profits)
Bitcoin, bought between $6.8k - $7.3k (40% profits)
Perfect call on $12k weekly resistance
Bitcoin dropped from 12k to 7k as expected (40% fall)
Bitcoin dropped to $3.5k as expected (40% fall)
Bitcoin, bought $6220 target $8480 (36% profits)
Perfect re-bought target
Education posts:
2618 trade
Top-down analysis
How I draw the trendline
In my recent idea, I told you $6,800 - $7,000 was my target for taking profits (orange box) due to the weekly resistance level. The resistance level was due to:
- Traders who longed below $5,000 are likely to take profits
- Traders who longed previously at $6,800 are closing their positions at break-even after the significant dump.
$6,800 is a resistance level to take profits on long positions, but it does not mean it was a good price level to short. I see many traders get confused between the two (close profits on long positions =\= time to open short positions).
Whenever you open a position you need to consider the risk reward to see whether it is worth the risk to open a trade. Let’s examine an example below. While both trades have identical Stop Loss and Target, the risk rewards are vastly different depending on the entries. One can give you only x1 gain while the other can give you x5 gain. So, would you take trade #1 or #2?
See, when you think logically everything starts to make sense.
Another problem with many traders is that they don’t have the patience to wait for the market to reach important support/resistance levels. They are desperate for actions and trade setups as they either have no patience or they believe trading frequently is the way to make money. Consequently, they always trade the dumb zone – the zone that has no significant support/resistance, low volatility and with a poor risk reward ratio.
-------------------------------------------------------------------------------------------------------
Market trend and cycle
On the 4th of July 2019, I explained it to you why I don’t think a new bull run has started and why I believe the market is trying to define its market range, probably between mid $5k and $16k. The market is still following the range for now. (click below chart & play)
I have also warned you that Bitcoin is in a transition phase (and, in a ranging market) which is extremely challenging to trade. Patience is critical during this market phase.
From the weekly timeframe, we can assume the market may consolidate for some time going forward (until either side is broken) because:
- the high is getting lower and the low is getting higher
- although weekly 50EMA & 55EMA have become resistance, weekly 200MA is currently still holding and both weekly 200MA & 50MA are pointing upwards
- you can say the market is in either an uptrend or a downtrend depending on which period you look at to determine the market trend. For instance, if you look at it from Dec 2018 the market is in an uptrend. But if you look at it since June 2019 it is in a downtrend. At times like this (ie no clear direction), the buyers are trying to buy each support while the sellers are trying to sell each resistance which cause the market to consolidate.
On the daily timeframe, undoubtedly the market is in a downtrend. Thus, from a swing trade perspective you should focus on shorting the market. Two price levels that I would be interested in shorting are:
1. Around $7,500 - $7,900 where the breakdown occurred on the 12th March. Looking at how the price reacts to this level is highly recommended.
2. $8,700, where the point of control is of the recent downward swing between $10,500 & $3,800. Stop loss should be set above $9,300.
However, bear in mind, the downtrend is invalidated only if price breaks above the recent swing high at $10,500. This means if price decides to break above $10,500 and starts a new bull-run, there is a chance that you might have just missed out on the biggest opportunity in your life.
You might be asking – “what should I do if I want to short the market but don’t want to miss the investment opportunity?” Simple, allocate part of your capitals for trading purposes and the other for investment purposes.
-------------------------------------------------------------------------------------------------------
**This post is for informational purpose only. I will not be held liable or responsible to you in any way for any loss or damage suffered by you through use or access to this post**
Past analysis (click & play):
Bitcoin, perfect call (300% profits)
Entered $8450, sold around $9,800 (16% profits)
Bitcoin, bought between $6.8k - $7.3k (40% profits)
Perfect call on $12k weekly resistance
Bitcoin dropped from 12k to 7k as expected (40% fall)
Bitcoin dropped to $3.5k as expected (40% fall)
Bitcoin, bought $6220 target $8480 (36% profits)
Perfect re-bought target
Education posts:
2618 trade
Top-down analysis
How I draw the trendline