Current Market Situation (7/10)
BTCUSD started a new trend this January after breaking a very big falling edge pattern and is now bullish. The 25,000$ is a key support to maintain the bull trend, so opening long positions makes sense in this market, especially when we look for short to mid-term profits. On the other hand, the market was acting as a bubble for a few years, so a lateral or down movement in the long run is the most probable scenario (like after the dot-com bubble, 2008 crash or whatever rally you want to analyze).
Patterns found by AI (6/10)
After a rally, we have seen some consolidation in a lateral movement, creating a clear support in the 24-25k$ zone. A channel or flag is unfolding so an upbreak would be a great bull signal at least until the 30k$ area where BTC will fight to decide if the rally continues or a double top is created.
AI predictive model confirmation (7/10)
When we run the AI models, we see that historically this kind of market movement is bullish as you can see in the white charts (the blue line is the prediction and the red is the current market behavior). A bit more lateral movement is possible, but a rally should start soon. Please note that we want to take profit at the 30k$ area because it is a major resistance and we want short-term profits to keep our capital working as fast as possible.
Risk Reward (8/10)
The Risk reward is quite good as we can earn 3 times the risk. Furthermore, if the price breaks the double bottom upwards, the probabilities of reaching our 7% target of benefits increase a lot.
Conclusion (7/10)
This is a very good trade, with a market supporting our idea, support near our buy point and a very favorable risk-reward ratio. This kind of trade is always difficult because the stop is tight and some volatility could break our trade even when the end result is a rally to 30k$ area. Anyway, the odds are on our side so this kind of trade is profitable in the long run.
BTCUSD started a new trend this January after breaking a very big falling edge pattern and is now bullish. The 25,000$ is a key support to maintain the bull trend, so opening long positions makes sense in this market, especially when we look for short to mid-term profits. On the other hand, the market was acting as a bubble for a few years, so a lateral or down movement in the long run is the most probable scenario (like after the dot-com bubble, 2008 crash or whatever rally you want to analyze).
Patterns found by AI (6/10)
After a rally, we have seen some consolidation in a lateral movement, creating a clear support in the 24-25k$ zone. A channel or flag is unfolding so an upbreak would be a great bull signal at least until the 30k$ area where BTC will fight to decide if the rally continues or a double top is created.
AI predictive model confirmation (7/10)
When we run the AI models, we see that historically this kind of market movement is bullish as you can see in the white charts (the blue line is the prediction and the red is the current market behavior). A bit more lateral movement is possible, but a rally should start soon. Please note that we want to take profit at the 30k$ area because it is a major resistance and we want short-term profits to keep our capital working as fast as possible.
Risk Reward (8/10)
The Risk reward is quite good as we can earn 3 times the risk. Furthermore, if the price breaks the double bottom upwards, the probabilities of reaching our 7% target of benefits increase a lot.
Conclusion (7/10)
This is a very good trade, with a market supporting our idea, support near our buy point and a very favorable risk-reward ratio. This kind of trade is always difficult because the stop is tight and some volatility could break our trade even when the end result is a rally to 30k$ area. Anyway, the odds are on our side so this kind of trade is profitable in the long run.
Trade active:
After this first 7% movement, the price has to break the channel up to keep rising and get the final profit of 20%.
BUT, there si a great risk management techinique to avoid losing much potential and lock in a 1,5% profit in 1 day trade, which is an amazing amount of money for 1 day.
In the image you can see a current profit of 7%, a stop loss in the -4% and a potential of 20%.
By selling half of the position now I get a certain 7% for half of my investment in 1 day. The other half would be waiting the final outcome of either a major profit of 20% or a loss of 4% in several days.
So the outcome will be:
Best scenario: 7% * 50% + 20% * 50% = 13,5% Profit
Good scenario: 7% * 50% + -4% * 50% = 1,5% Profit
Bad scenario: Do not exist anymore!
There are also ways to do this with options and could me more optimal, but this is much easier to understand.
Remember the rule number one, never lose money :wink:
BUT, there si a great risk management techinique to avoid losing much potential and lock in a 1,5% profit in 1 day trade, which is an amazing amount of money for 1 day.
In the image you can see a current profit of 7%, a stop loss in the -4% and a potential of 20%.
By selling half of the position now I get a certain 7% for half of my investment in 1 day. The other half would be waiting the final outcome of either a major profit of 20% or a loss of 4% in several days.
So the outcome will be:
Best scenario: 7% * 50% + 20% * 50% = 13,5% Profit
Good scenario: 7% * 50% + -4% * 50% = 1,5% Profit
Bad scenario: Do not exist anymore!
There are also ways to do this with options and could me more optimal, but this is much easier to understand.
Remember the rule number one, never lose money :wink:
The important pattern is still unfolding. It's important to break the upper blue line to end the flag or channel to see a trend continuation which should move the price to at least 30k$ where we can close with a 20% profit.
Even though the price could move even higher because the trend is now bullish, I prefer to take small but more certain profits. And come on, 20% without taking leverage into account is a lot!