BTCUSD: Pin Bars Appear Within Support Zone. Signs Of Reversal?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: Lower low made at 7960 followed by a retrace and closed back within the 8656 boundary. The current candle (still open) is also showing a second pin bar off the the 8171 upper boundary of the large magnitude support zone below. I have bought more at 9202.18 (Coinbase) to add to my long position trade.

You know when a short term low is established when members of the herd send you private messages bragging about their short positions. It is very entertaining, but more importantly serves as an excellent contrarian indicator, no different from all the buyers at 18K screaming that 30K is around the corner back in December. It does not surprise me that the first signs of stability are unfolding as I write this.

As I keep emphasizing, effective positioning begins with a perspective. The problem is there are many perspectives to choose from and they all have their own unique focal points. The short term perspective (day trading) is bearish , but this perspective changes often, while the long term (position trading, investing) is bullish and requires major fundamental shifts in order to change (like how interest rates affect stocks). Since I am not day trading, I am only focusing on bigger picture clues and information. This is probably one of the more difficult concepts for newer traders to understand because they are usually so focused on the immediate price action and do not know how to separate perspectives.

From the broader perspective, this market is now showing some early signs of stability. Price has managed to close within the 10988 to 8656 support zone (.618 are of broader bullish structure) and has rejected the upper boundary of the 8171 to 4983 largest magnitude support zone (.618 area of entire rally from sub 150 to 20K). This price action can lead to a rally attempt, but there is no way to tell if price is going to build the next broader leg up to the major highs from here. Reasonable targets for such a rally attempt are the 10988 upper boundary of this zone, and 12565 which is the short term trend resistance at the moment.

Breaking beyond those levels will require very bullish motivators which are possible since nothing significant has really changed in this environment. I believe the reward/risk is very attractive at these levels, in addition to the projected levels and now candle formations. The new long position that I have taken brings my average price to 10,886. Depending on how price behaves IF it makes it back to projected resistances, I will determine if it makes sense to lock in some profit or hold further. When trading on broader time horizons, there is much less precision involved but some basic rules and best practices that should always be adhered to no matter what.

In summary, the reversal that I am observing is still very small and it is possible that it can fizzle out. I am betting that there is less of a chance of that happening, but IF it does, that is okay too. I do not plan to add any more to my long after this trade. This position is definitely more aggressive, but I understand the risks involved and have sized carefully. The more conservative scenario is to wait for a higher low or failed low before taking a new long which would also serve as an attractive swing trade if you are looking for a shorter time frame exit. Risk would be measured from the 8K level. It is very easy to get sucked into the drama, and that is just human nature. There are many ways to minimized this, and that is what best practices are all about. Careful sizing, waiting for relevant levels and evaluating price action in light of the time horizon you intend to trade on are examples that lead to more rational decision making. If you find yourself confused or conflicted, it means you are not organizing your information effectively. Choose one time frame, learn what is relevant and reasonable for that magnitude, and then stick to it.

Questions and comments welcome.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| | Cofounder (S.C.)

Japanese bulls looking strong here:
Update? Pls and thanks!
+1 Reply
Thanks for this, may I ask regarding your statement;

"Choose one time frame, learn what is relevant and reasonable for that magnitude, and then stick to it. "

I have only been trading for about 6 months, and time frame conflict is something I am still trying to manage. Is there a standard time projection per chart timing? i.e., If I am looking at a day chart what would my range of focus be as compared to say a 6hr or even to a 30min candle chart?

I find myself getting sucked into wanting to get more 'surgical' regarding a price of entry or exit on a small time frame, but then missing the bigger picture on a larger one, but then also missing an optimal buy/sell point from being too far out. ARGH! :-)
+2 Reply
Do you think the CFTC and SEC hearing on the 6th has any role to play after 3 days now? What kind of impact will it have on the prices?

They are very skeptical of USDT/tether and also CFTC is going to make announcements regarding the CME and CBOE BTC futures contracts, i.e. strict regulation at least.

What about the issue with Bitfinex. There is some announcement expected on the 6th again.

Do you think it will have an impact on the price?
+2 Reply
oetcap doctorkesh
@doctorkesh, I too would like to know others opinions on this maybe the 6th will be the top of this run, might line up perfectly with the target range marc mentions above
halcy0n9001 doctorkesh

All news affects price in this highly emotional and speculative market, unless it's already well known and priced it.

Unless you know what the news will be it's almost impossible to predict how it will be taken by the market.

If you want to trade or invest you just have to manage risk for the worst scenario and let the market do its thing.
doctorkesh halcy0n9001
@halcy0n9001, 100% agree.

Major banks and credit card companies banned crypto purchases using credit cards. Wait till the news spread tomorrow.

CFTC and SEC already have informed what their agendas for discussion on Tuesday are. They are not going to praise Bitfinex and Tether for their outstanding performance in raising their marketcap and profits. Also, CFTC has received several complaints from the financial institutions regarding BTC Futures contract settlements, which they are not happy to settle.

BTC ETF is not going to be approved this year.

Bye bye bitcoin. Welcome ETH, NEO, IOTA, XLM and maybe XRP.

halcy0n9001 doctorkesh
@doctorkesh, Or perhaps hello regulation, bye bye volatility and massive swings.
doctorkesh halcy0n9001
@halcy0n9001, regulation is the other word govs are using to centralize cryptos.
+1 Reply
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