BTCUSD: Higher Low Implies Strength. 10,500 Area Within Range?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: Higher low formation still intact while price is attempting to break the 9047 previous peak. This swing high break is the first sign of bigger picture confirmation of strength since early January. The next anticipated resistance is the 9887 to 10836 zone.

Higher lows often lead to higher highs and that is the formation that is unfolding at the moment. Since the 8427 resistance break, I wrote about how it was more likely to see this rather than a new low. What makes this reversal pattern even more compelling is that fact that is came out of a major support zone that I have been emphasizing for weeks now. I am adding one more unit and got filled at 8854.66 which now brings my average price to 10,020.

Why am I adding? My original plan was to stick with what I had while the market worked its way higher. This exception is based on the solid technical signal, and the mindset that if the risk is much lower, it is better to be more aggressive now compared to a less certain condition. This is where knowing your risk tolerance and what you are willing to lose comes into play. I am not taking a dramatic risk, and market conditions are now much more favorable, why not push while the pushing is good?

Keep in mind this new portion is for my position trade which means I am planning to hold it, even if the market decides to retest lows. I am accepting that risk now. Can this be a swing trade? If you use the 8500 level as a point of reference for your risk, and the 10,500 area as your target you are looking at reward/risk of about 2:1 which is favorable.

Another technical point to consider is the new bullish trend line that is still intact. As long as price can maintain this momentum, the 9887 to 10836 zone (.618 of recent bearish swing) is a reasonable expectation. The confirmation of this oncoming strength would be the break of the 9074 high which can lead to some short covering price action that has not been seen in recent weeks (see LTC for a nice example of this).

What can negate this is a break of the swing low at 7851. IF this bearish scenario takes hold, I am anticipating more of a broader range bound market rather than new lows because of the magnitude of the current support zone (8171 to 4983 which is the .618 area of entire bullish structure) and the fact that we took out the trend resistance of 8427.

In summary, professional speculators are flexible and adjust based on what the market throws at them. I continuously read on other forums the frustrations or complaints of participants because the analysts they are following "keep hedging their signals". If scenario A happens then expect this, but if scenario B happens then expect that. Those who are less experienced have not learned yet that markets cannot be "predicted" with 100% certainty, only estimated with weighted probabilities. You must be open and flexible to multiple scenarios, and more importantly consider the risks of the adverse ones. That is the nature of speculation whether you are day trading or investing and the sooner you accept the flexibility mindset the sooner you will be prepared for the market. In my case, I am working from a broad perspective and have positioned myself for the when the bigger picture trend reasserts itself. Can I be wrong? Sure, but I am willing to accept the loss if this market falls apart. One lesson I learned very early in my trading journey is that the market is ALWAYS right, participating in it is a matter of developing the ability to go with ITS flow. Be open, be flexible.

Questions and comments welcome.
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10K test maybe today with CBOE expirations. CME expirations on the 23rd will lift us to probably 12k....then market hype will come back in with media attention. not saying a bounce at 12 is not possible or probable
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Pretty sure there's plenty of heavy hands who are not done cashing in from 2017 yet. Been around since 2013.. Kinda seen this stuff too many times in the past. Market sentiment just feels way to high still...
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scalping this neutral zone for now
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Cool. Things definitely feel more 'up' in terms of general sentiment out there, much less FUD etc. Like you say, emotion rules these markets much more than the trad ones. The upwards breakout just feels like it's coiling up to pop, regardless of the charts, which also seem to suggest it.
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I always appreciate that you keep your analysis open to several possibilities as well as your openness about where your positions lay. I've definitely learned a lot in the 3 or so months I've been following you.
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ErsozSozer Commsky
@Commsky, i totally agree with you
Great idea.. love it!
So on the 4h chart we broke through ichimoku. Looking pretty bullish there if you ask me. You say this uptrend is a short-term movement against the general bear trend.

Let's look at our indicators on the daily chart:
-MACD hasn't been this bullish since before the correction starting on Dec 19th
-Stoch RSI overbought, but has a history of staying in overbought territory
-RSI pointing up with plenty of room for growth
-+DI and -DI are converging gain in a bullish manner with ADX well above 40. We can expect some action.
-CMF just moved into accumulation which we have last seen on Dec 1st

You are gonna have to admit that these indicators look extremely bullish... We can see two green candles with C=H. If volume increases, this could turn into a mid-term bullish scenario.

knowhatamine knowhatamine
@knowhatamine, a bit too certain

Sorry I meant to post this in milanjelic's analysis who seems to be a bit too certain that we're in a bear market. As you always say, it's about probabilities and risk management, not about being proven right. :)
Don't fall for the bull-trap. This has happened literally from $17,000 to $8,000... it goes up a little, then down a LOT. The bubble is popped, its going down. Welcome to capitulation
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