It's been some time since my last idea. The buy between $6800 - $7300 I have been mentioning for months hit its mid-term target around $9500 within a few days after Bitcoin hit $7300. While many were still trying to figure out what news caused the surge, some of my positions were already exited with profits.
The $7300 bottom in Oct is now taken out and it may look like panic selling has started. Some of you pointed out the descending channel while some pointed out the up-trendline. So, who is right? Is it bullish or bearish? Well, it’s all about perspective and your own strategy. In this instance, both sides can be right. What I can tell you though is what my strategy is telling me. You can agree or disagree and make up your own decision. Leave a comment below if you would like to discuss.
First, from $20000 down to $3000 was a bearish market. Everyone agrees, right? Then the 3 months accumulation between $3000-$4000 was the start of the bullish move to $13800. This bullish move not only broke above many resistances and the 16 months downtrend but also created a higher high with followed through! This is a crucial piece of puzzle. It means that as long as $3000 is not taken out, the chances of heading higher is more favourable. Isn’t this the classic textbook example of “Buying the pull-back after a higher high is created” (see chart below)? If trading is about probability, then why would you trade a scenario with a lower probability?
Some of you still think Bitcoin is in a bear market. May I ask why? Is it because Bitcoin is still below $20000? If so, are you going to buy only when Bitcoin is above $20000? Is the risk reward ratio ideal if you buy at $20000? How do you define a new bull market and does this definition applicable to any of the historical data? Please take some time to listen to your own answer to these questions. You may be surprised that you might get a different answer once you think it through.
Will it go lower than $3000? Possible. In fact, I do have a scenario that Bitcoin is still in a bear market. But until the market proves to me it’s still in a bear market I just have to trade the scenario with higher probability since trading is all about probability and risk management. Who cares whether it will go lower than $3000 or not. We are not here to catch the bottom because that’s not how a trader makes money. What’s the chances of catching the exact bottom? Almost impossible. A good example of how to make money without catching the exact bottom is where I bought Bitcoin when it’s at $3500, instead of $3000. High probability and good risk reward are all I need.
I have told you in my group that:
if you have listened to my advice and bought at $3500 and sold most of your positions at $13800, it is not a bad idea to buy back some of your positions between $6800 - $7300. (hey, it’s almost 50% discount from $13800! Didn’t you ask me a few months ago when Bitcoin was above $10000 whether it’s a good time to buy?) The next buy back zone is around $5500 as marked on the chart.
If you have not made profits in the past, please wait until a higher high is created at least on the daily timeframe, or until a 2-3 months rounded bottom emerges. Now is not the time to catch the knife.