Bitcoin: Buy Signal In Progress?

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar

Bitcoin is now within the potential higher low price area that I have been anticipating. A new buy signal may develop here upon the close of the current candle and break of its high. More importantly, the reward/risk continues to be attractive. On the other hand, IF price takes out the low of the current candle, a 30K test is still a reasonable possibility.

What to do? First, WAIT for the candle to close because things can change fast in a few hours. What makes this potential swing trade idea attractive is primarily the reward/risk. Buying around 37K with a stop loss around 33K is 4K points of risk while the reward potential can be measured by the first resistance AREA which is 40K to 43K. 1:1 is adequate, but there is a good chance that this can improve IF 40K is taken out. A higher low established off the 35K area increases such a chance.

A 40K resistance break can take price into the mid to low 40Ks over the next week. Such price action will attract LOTS of hype and excitement, and many will chase, thinking 60K is next but we are not so blindly optimistic. When Bitcoin broke 40K during it's selloff it confirmed a broad Wave 4 consolidation which means many false starts, fake outs and lack of progress in regard to the bigger picture trend. This environment can persist for a number of months or longer so this prompts us to ADJUST swing trade profit expectations to more REALISTIC levels.

On that note, the recent price structure, while attempting to improve, has YET to offer evidence that bearish momentum is no longer in play. Right now 40K still serves as a lower high which can lead to a lower low or 30K support break. Buy signals that appear within bearish price structure are not as likely to follow through. This is why we categorize buy signals in this area as aggressive.

While the long term trend is still bullish , the short term price structure is in conflict which can be very confusing (especially for fake gurus). For those who prefer a more favorable environment, it really helps to WAIT until the short term structure realigns with the bigger picture. This means forfeiting what appears to be the "low" in exchange for a more supportive environment (higher prices). The evidence of such a scenario BEGINS to come into play once the 40K resistance is decisively cleared.

I realize everyone is anxious to trade but to offer an idea of how long it takes for a QUALITY swing trade idea to develop: our most recent trade off of the 34K area took 3 WEEKS to appear. That means we had NO trades in Bitcoin for 3 WEEKS. It is perfectly understandable to get caught in a fake out once or twice, but if you are putting on more than 2 or 3 trades a week, and they are not day trades, then you are over trading. WAITING offers a much better performance outcome.

Thank you for considering my analysis and perspective. I hope you find it helpful.
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Great analysis Marc, maybe one of the best I've seen on here. I noticed that a 3 week tight formation just came up on my radar adding to the complexity BTC is trading in. I'm waiting on confirmation to see what way the trend goes after what my analysis tells me is a head and shoulders pattern, marking the beginning of a reversal.
+10 Reply
fbush3300 works2020
@works2020, drew the same channel on my chart.. haven't bought the recent dips in anticipation of the channel digging deeper to the downside. Only time will tell if that was a good choice. And just like your chart, was picturing a bull trap scenario in the mid 40s before continuation to the down.
+3 Reply
fract works2020
thx for your new post. you know my chart. im still strong bullish. lets see bro. :-)

+8 Reply
the short term and long term views appear conflicting as you very rightly mentioned. Traders just beginning to participate (many experienced traders too) fail to wait for a confirmation of the trend. I feel that is one of the most dangerous things out there. A few trades might go their way, and they feel they were right. but on a net basis, the results turn out to be negative. that is why I always mention to either wait for a volume confirmation or a channel confirmation before entering a trade. that is how you become wealthy on a long term!
+5 Reply
awesome outlook and I personally appreciated the wisdom and commentary. thank you🔥
+3 Reply
This is what a professional analysis is supposed to look like in my opinion . Excellent explanation on both the technicaI side, and the human factor . I think your last paragraph really nails the point . If you want to be successful in this business then you have to be patient . If you chase the market and abandon your plan just to trade , you are going to get burned . Let the market come to you .
+3 Reply
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