MarcPMarkets

Bitcoin: Waiting For New Buy Signal.

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Consolidations are not easy to trade. These environments often separate those who know how to trade from those who pretend. The key aspect not to lose sight of is the broader trend. Based on our LONG only swing trade strategy, it is still bullish .

The 27.5K to 32K area so far has proven to be supportive. There is a failed low formation in play on the daily time frame while at the same time a new sell signal is about to confirm. As long as 27.5 continues to hold, probability favors an eventual bullish break out on the short term. This can take place over the next week or two.

IF 27.5K is compromised, for our strategy, that will signal a broader consolidation is likely in play. If you want to get a better idea of what this scenario may look like, look at XAUUSD from August to December. This is NOT a prediction, it is a potential scenario to prepare for IF Bitcoin chooses to go this route.

What About The Sell Signal?

Unless you are day trading this, sell signals on this time frame carry high risk and low probability. For our strategy there is nothing to do but WAIT for the next buy signal which is likely to develop in this low 30K area. As most of our followers have learned, PATIENCE pays. A good trade begins with a plan, not a reaction. The break of the low of the current inside bar formation (blue box) would confirm a new sell signal.

Aren't All Trades The Same?

We categorize our trade strategies by time frame and the larger the time frame, the GREATER the REWARD/RISK. If you are unsure of how to manage risk in proportion to the expected time horizon of your trade, then you are prone to make the common mistake of taking big risks for small rewards. Over time you can't win this way.

I receive many questions from new traders associated with this topic. Before risking real money, you need to have a clear plan, not a complex one. And the plan begins with categorizing your idea to a particular time frame. How long to you expect to be in the trade for? Less than a day? Less than a week? More than 6 months? Then comes the risk management. If you are only interested in quick rewards, you will succumb to human nature and the herd mentality.

Thank you for considering my analysis and perspective, I hope you found it helpful.

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