All the hype about 100k or 1 million dollar Bitcoin is being overshadowed by the fact it is unlikely to be a straight path. With Bitcoin setting up to break higher, it is likely to attract a lot of Bitcoin band wagoners, you know those that only a month ago were calling for 6k.
Most participants in the market are reactionary. They react to this news, that news, and tend to jump on the bandwagon at precisely the wrong time, then when it does not pan out, jump off at precisely the wrong time.
What successful investors and traders do is have a strategy and a plan to enact. No different than going into business, you must have a plan, but the plan must be adaptive as time plays out. Seldom do plans work out perfectly, but those that survive do not react to markets, they anticipate.
So with Bitcoin making another attempt to break out is this the time to buy? Probably not. Sure it can push to 16k from here, but probabilities favor a pullback at some point especially with such a parabolic move in the shorter term.
Remember markets are made up of various traders trading various time frames. From scalpers to the long term investor, there are levels where each one has targeted to enter or exit a position. When these levels overlap we get a more decisive swing.
A close above 13,400 increases the probabilities of a swing into the mid 14k region. However even if we do push into this area there are many participants that were buying in the low 10k region. Taking some profits is never a bad thing, especially when you are up 40% in a couple months.
So why not take a trade here? Simple, we are swing traders and the first thing we do with any trade is measure our risk. Risk can be measured from the 12,640 level which is slightly below the lowest candle of the current consolidation. With a reasonable target of 14,200 this is about a Reward to Risk of 1:1. Because this is a continuation trade in a major resistance area, the probabilities of being successful are less than 50%, so probabilities favor losing in the long term if we take this type of trade over and over again.
We need to have a R:R of at least 1.5 or preferably above 2.0, of which both of our recent trade signals sent (3.40 and 3.60 respectfully) were from more favorable positions. So right now we are simply in a waiting pattern looking for a more favorable setup or a higher R:R that makes up for being a more aggressive trade.
What we want to see is either a pullback into the lower 12k area with a bullish reversal, or a pullback off the 14,200 level (back into the current resistance then support zone) with a bullish signal.
Until then we wait, and though that may be boring, most action is simply impulsive traders that react to swings and news in the market. This is in the short term, so what about the long term and 16k?
On the weekly chart we have a very broad higher low which generally leads to a higher high. We have also taken back the 50% retrace of the overall bearish swing as measured from the peak in 2017 to the low in 2018. So it reasons that we at least make an attempt at the previous high if not make a new one.
In addition Bitcoin has garnered interest from hedge funds and larger investors that are adding Bitcoin to their Gold and Treasuries positions which we have been waiting for years to happen. Patience pays off once again.
From a technical perspective we have broken out of the 11,800 resistance level and the current weekly candle is taking out the high (continuation). This is a positive sign from such a major resistance area, but often markets come back to retest these levels. So though I would not mind adding a small position here on the breakout, if you do not own any Bitcoin, the more conservative play (if you already have a position) is to wait for a pullback to retest resistance now support around the 12k area.
This aligns with the shorter term daily chart, and though I believe a swing to 22k is possible over the next 12 - 18 months, it is likely not a straight line. With a break out in play we are looking for pullbacks for shorter term swing trades and also to potentially add to our overall position for a broader move to 32k which may take 2-3-5 years to evolve.
Most do not have the patience to look at the long term. They want instant gratification now, just like all the trolls that for the past 2-3 years have been calling me an idiot for buying the dip. No different than those who said Gold was dead at $1200. I steadily added to my Gold and Silver position, adhering to my strategy of accumulation, and that patience and perseverance has paid off, while those same trolls, are now jumping on the bandwagon, while I am selling into the rally.
Did I time the high perfectly? No, but I am reducing my exposure into rallies, and the same can be said with Bitcoin here, however, I still think there is a lot of room to run and would rather accumulate on the dips, than get anxious and sell at these levels.
In short any pullback into the low 12k's or under will be an area to slowly add to a current position, any further rally into the upper teens is where I want to start to reduce risk. Does this mean I blow out my holdings? NO, I will simply trim 5% here, 5% there at predetermined levels based on my plan.
Though in the long term, 5-10 years, there is potential for Bitcoin to hit 100k or even 1 Million, do not buy into the hype that it is going to happen over the 12 months. Set reasonable expectations not moon shot hype. Though 20k may trade by the end of the year, I would not count on it.
Over the past couple of years, and amongst the many trolls, we have an average cost of $6851 in Bitcoin. How does that look now? Sure we added at 13k, but we also bought at $4500, and we have positioned ourselves for a broader swing, not listening to the wannabe gurus, but sticking to our plan and strategy for the long term.
While most are still licking the wounds of their alt coin portfolio, we took a losing portfolio full of crap coins, and turned it into a winner. It did not happen overnight, it took a little over 2 years, but we are now in a position to benefit from the bullish momentum and long term swing in Bitcoin. Not that we are gurus, but we stuck with our plan and strategy and were not looking for home runs instead taking base hits when they came.
Most participants in the market are reactionary. They react to this news, that news, and tend to jump on the bandwagon at precisely the wrong time, then when it does not pan out, jump off at precisely the wrong time.
What successful investors and traders do is have a strategy and a plan to enact. No different than going into business, you must have a plan, but the plan must be adaptive as time plays out. Seldom do plans work out perfectly, but those that survive do not react to markets, they anticipate.
So with Bitcoin making another attempt to break out is this the time to buy? Probably not. Sure it can push to 16k from here, but probabilities favor a pullback at some point especially with such a parabolic move in the shorter term.
Remember markets are made up of various traders trading various time frames. From scalpers to the long term investor, there are levels where each one has targeted to enter or exit a position. When these levels overlap we get a more decisive swing.
A close above 13,400 increases the probabilities of a swing into the mid 14k region. However even if we do push into this area there are many participants that were buying in the low 10k region. Taking some profits is never a bad thing, especially when you are up 40% in a couple months.
So why not take a trade here? Simple, we are swing traders and the first thing we do with any trade is measure our risk. Risk can be measured from the 12,640 level which is slightly below the lowest candle of the current consolidation. With a reasonable target of 14,200 this is about a Reward to Risk of 1:1. Because this is a continuation trade in a major resistance area, the probabilities of being successful are less than 50%, so probabilities favor losing in the long term if we take this type of trade over and over again.
We need to have a R:R of at least 1.5 or preferably above 2.0, of which both of our recent trade signals sent (3.40 and 3.60 respectfully) were from more favorable positions. So right now we are simply in a waiting pattern looking for a more favorable setup or a higher R:R that makes up for being a more aggressive trade.
What we want to see is either a pullback into the lower 12k area with a bullish reversal, or a pullback off the 14,200 level (back into the current resistance then support zone) with a bullish signal.
Until then we wait, and though that may be boring, most action is simply impulsive traders that react to swings and news in the market. This is in the short term, so what about the long term and 16k?
On the weekly chart we have a very broad higher low which generally leads to a higher high. We have also taken back the 50% retrace of the overall bearish swing as measured from the peak in 2017 to the low in 2018. So it reasons that we at least make an attempt at the previous high if not make a new one.
In addition Bitcoin has garnered interest from hedge funds and larger investors that are adding Bitcoin to their Gold and Treasuries positions which we have been waiting for years to happen. Patience pays off once again.
From a technical perspective we have broken out of the 11,800 resistance level and the current weekly candle is taking out the high (continuation). This is a positive sign from such a major resistance area, but often markets come back to retest these levels. So though I would not mind adding a small position here on the breakout, if you do not own any Bitcoin, the more conservative play (if you already have a position) is to wait for a pullback to retest resistance now support around the 12k area.
This aligns with the shorter term daily chart, and though I believe a swing to 22k is possible over the next 12 - 18 months, it is likely not a straight line. With a break out in play we are looking for pullbacks for shorter term swing trades and also to potentially add to our overall position for a broader move to 32k which may take 2-3-5 years to evolve.
Most do not have the patience to look at the long term. They want instant gratification now, just like all the trolls that for the past 2-3 years have been calling me an idiot for buying the dip. No different than those who said Gold was dead at $1200. I steadily added to my Gold and Silver position, adhering to my strategy of accumulation, and that patience and perseverance has paid off, while those same trolls, are now jumping on the bandwagon, while I am selling into the rally.
Did I time the high perfectly? No, but I am reducing my exposure into rallies, and the same can be said with Bitcoin here, however, I still think there is a lot of room to run and would rather accumulate on the dips, than get anxious and sell at these levels.
In short any pullback into the low 12k's or under will be an area to slowly add to a current position, any further rally into the upper teens is where I want to start to reduce risk. Does this mean I blow out my holdings? NO, I will simply trim 5% here, 5% there at predetermined levels based on my plan.
Though in the long term, 5-10 years, there is potential for Bitcoin to hit 100k or even 1 Million, do not buy into the hype that it is going to happen over the 12 months. Set reasonable expectations not moon shot hype. Though 20k may trade by the end of the year, I would not count on it.
Over the past couple of years, and amongst the many trolls, we have an average cost of $6851 in Bitcoin. How does that look now? Sure we added at 13k, but we also bought at $4500, and we have positioned ourselves for a broader swing, not listening to the wannabe gurus, but sticking to our plan and strategy for the long term.
While most are still licking the wounds of their alt coin portfolio, we took a losing portfolio full of crap coins, and turned it into a winner. It did not happen overnight, it took a little over 2 years, but we are now in a position to benefit from the bullish momentum and long term swing in Bitcoin. Not that we are gurus, but we stuck with our plan and strategy and were not looking for home runs instead taking base hits when they came.
This is a classic example of a fake-out or failed high. The herd jumping in on all the fake gurus turning bullish reacting to the recent rally, not putting the swing into perspective. Our plan was to wait for a setup that met our criteria and that kept us from being impulsive, excited and now blowing out a bad trade after two winners. Base hits, not home runs.