Bitcoin: Buy Signal, Low Volume.

Bitcoin price action is NOW beginning to present the setup that I have described two weeks ago. It goes to show how WAITING is better than reacting. Even now, with the current setup, I am not in a hurry to put on the swing trade because of the suspect environment. Knowing how your strategy performs in a specific ENVIRONMENT is more important than just having a strategy. In forgiving environments, most strategies work, in a tough environment many will under perform. So what is it about the environment that makes me hesitate?

We are in the MIDST of a holiday and MY strategies (swing trade and trade scanner) are both MOMENTUM based strategies. Without activity (volume) momentum based strategies are likely to under perform because of lack of follow through, lack of catalyst ,etc. We have seen this type of price action in Bitcoin since June (typical summer time action). Again this is a general tendency which calls for adjustment in expectations and behavior, it is NOT a rule. For example, even though its been a slow month in August, my trade scanner still produced a positive month overall, and it generates at least 3 to 5 trades per week.

The trade scanner has its own rules and simply follows them and adjusts stop loss and take profits based on changes in recent price ranges. I on the other hand adjust by being more selective with trades, which means waiting for very specific criteria. If the market moves without me because my criteria was not met, well I let it move without me. This has lead to me calling only 1 trade in August and it got stopped out when Bitcoin broke 28K.

The new trade idea that I am considering is based on the break of 26,200 (larger pin bar high). If such a move unfolds, and momentum follows through (low probability) then a reasonable take profit is in the 28K resistance area. You can figure out the stop loss.

Overall, it is important to realize that Bitcoin IS a speculative asset. Many investors out there only think of Bitcoin in isolation and consume LOTS of content that reinforces that idea. The thing is that is not reality. No matter what you think of inflation, and conspiracy theories, etc., Bitcoin potential generally depends on the money supply (just like everything else). Bonds shape the cost of money and affect the expansion or shrinkage of the money supply. Before there are any spectacular rallies making everyone billionaires again, the right environment needs to be in play, and the first sign of that is a trend of lower interest rates.

Thank you for considering my analysis and perspective.