Bitcoin: Expect High Prices?

Bitcoin has rallied a little further than many expected. The next high probability support zone for swing trade longs is 28,300 to 29,500 (see blue rectangle on chart). If current momentum stays intact, it is also possible that Bitcoin doesn't offer an ideal retrace, and pushes through the 31K resistance. The next major resistance is the 33K area.

If you are still stuck on "why" and spend all your time scouring news, then you set yourself up to react to information which is ineffective in a RANDOM environment. I notified my members when this move was just a buy signal at 25K. I wrote about this for weeks before the move as well. I don't waste ANY time consuming news, and instead focus on price structure, levels, patterns and setups. In other words, human behavior as it is reflected through price action. If you missed this, or worse got caught short, that is a sign that you are consuming and acting on information of little to no value.

This move also confirms a change in short term momentum to bullish. NOW both long term structure and short term momentum are aligned. This means swing trade shorts are considered counter trend and LOW probability. This environment is favorable for short term trend following systems like the one my Trade Scanner is built upon. Long signals are likely to appear and follow through at less than ideal levels.

Another concept that I want to point out is how a move like this stimulates greed in your own decision making process. In case you don't know, greed is bad and leads to losing in the long run. This is ESPECIALLY relevant to smaller time frame strategies like day trades or swing trades. Everyone hopes they are getting into the next "big move", moves that look like the one from 25 to 30K in less than a week. When I look back on this chart, I can clearly identify 9 swing trade long signals since March. The average profit available in each move was about 1K points. It took 9 attempts before the "home run" trade followed through. If you had taken the previous 9 setups and never took any profit (because you expect more: greed) you would have sustained numerous small losses or break even outcomes.

When it comes to taking profits, you want to operate with AVERAGE profit expectations, NOT expect outliers. Is it possible to capture a larger portion of an outlier move? Yes but it requires flexibility in your trade management process that is defined by technical rules. For example, a management rule can be: if the trade reaches 1:1 reward/risk, lock in a portion of profit and let the other portion ride until a conflicting signal appears on your specific time frame chart.

Markets are HIGHLY random. No ONE can forecast the magnitude of the moves ahead with any degree of consistency. The best we can do is estimate probabilities, define risk and ADJUST as new information becomes available. And without a rules based system or decision making process for each component of a trade, your results, even if you win on occasion are nothing more than random. The greatest obstacle for the retail trader is not the market, environment or industry, it is themself.

Thank you for considering my analysis and perspective.