Last time we discussed the RSI buy signal on the 2-day graph. This happened at $37 640. This signal has long-since been stopped out.
What many fail to notice is how these RSI strategies don't hold some mystique truth that no one else knows about. The buy and short signals have an average win rate of 30-35%, meaning that most signals in fact do get stopped out.
What truly separates them from traditional technical analysis is how the downside risk of any given trade is always vastly limited.
There are two separate stoplosses incurred. One is for the full candle close, such as the 2-day chart in this case. The other one is a wick stoploss, which is calculated based on a certain formula.
In the case of our 2-day RSI signal at $37 640 the candle close stoploss was at $37 400 for a total risk of -0,63% - as in nothing!
The wick stoploss was at $36 379 for a maximum loss of -3,35% which in turn was the actual loss in this trade.
The wick stoplosses give enough leeway to stay within three standard deviations. What this means is that the chance of getting stopped out just to see the price recover back up again is slim.
What typically happens whenever a buy RSI signal gets stopped out is that the price is highly likely to continue trending down within the upcoming <50 candles, or within the upcoming 100 days based on the 2-day chart on which we initially got the RSI buy signal.
Note how this by no account means that the price cannot go full force on any price pump, bear rally or what have you. It doesn't mean that the price won't surpass the actual entry level. Not at all. It just means things don't look good. The only cure to this is to get a new RSI buy signal. Otherwise, we'd do wise in expecting further drops.
And in the case of this failed signal Bitcoin dropped by -24% at most during one weeks of trading.
So where then do we stand with Bitcoin at the moment?
Well, given how the price has plummeted by -40% since early April and -28% in just two weeks in what can at times best be described as waterfalling movements, it is equally clear that it's trading at technical support in the shape of a horisontally relevant line.
But here's where things get both interesting and complex, for as it seems we could in fact be in for a megaphone pattern in the shape of that ABCDE that we've been going on about on previous occasions.
Previously, however, we referred to this ABCDE as regular triangle, and not an expanding one. If this were to be the case, it could further confirm that we're still in a technically complex 4th wave prior to a final little 5th wave pump to the north.
The upcoming few days and weeks will be rather defining as continuous price action below the aforementioned parallel channel would significantly increase the chances of an expanding triangle in the making.
To be continued.
/Long Life Trading
What many fail to notice is how these RSI strategies don't hold some mystique truth that no one else knows about. The buy and short signals have an average win rate of 30-35%, meaning that most signals in fact do get stopped out.
What truly separates them from traditional technical analysis is how the downside risk of any given trade is always vastly limited.
There are two separate stoplosses incurred. One is for the full candle close, such as the 2-day chart in this case. The other one is a wick stoploss, which is calculated based on a certain formula.
In the case of our 2-day RSI signal at $37 640 the candle close stoploss was at $37 400 for a total risk of -0,63% - as in nothing!
The wick stoploss was at $36 379 for a maximum loss of -3,35% which in turn was the actual loss in this trade.
The wick stoplosses give enough leeway to stay within three standard deviations. What this means is that the chance of getting stopped out just to see the price recover back up again is slim.
What typically happens whenever a buy RSI signal gets stopped out is that the price is highly likely to continue trending down within the upcoming <50 candles, or within the upcoming 100 days based on the 2-day chart on which we initially got the RSI buy signal.
Note how this by no account means that the price cannot go full force on any price pump, bear rally or what have you. It doesn't mean that the price won't surpass the actual entry level. Not at all. It just means things don't look good. The only cure to this is to get a new RSI buy signal. Otherwise, we'd do wise in expecting further drops.
And in the case of this failed signal Bitcoin dropped by -24% at most during one weeks of trading.
So where then do we stand with Bitcoin at the moment?
Well, given how the price has plummeted by -40% since early April and -28% in just two weeks in what can at times best be described as waterfalling movements, it is equally clear that it's trading at technical support in the shape of a horisontally relevant line.
But here's where things get both interesting and complex, for as it seems we could in fact be in for a megaphone pattern in the shape of that ABCDE that we've been going on about on previous occasions.
Previously, however, we referred to this ABCDE as regular triangle, and not an expanding one. If this were to be the case, it could further confirm that we're still in a technically complex 4th wave prior to a final little 5th wave pump to the north.
The upcoming few days and weeks will be rather defining as continuous price action below the aforementioned parallel channel would significantly increase the chances of an expanding triangle in the making.
To be continued.
/Long Life Trading