BTCUSD update: Bullish momentum is in effect as price reaches the 9887 to 10836 resistance zone, coming off of the recent higher low formation. This is where the herd begins to get excited, and also where the first profit target should be considered for swing trades.
On 2/11/18 I highlighted a swing trade that triggered on the break of the 8570 candle high (I got filled at 8690, it's in the report). I am holding for a broader move, but for those who were more interested in a swing trade (short term move, defined stop and target), the first target area is about 650 points away.
The 9887 to 10836 is the first resistance zone (.618 of recent bearish swing), that is being tested since the sell off. The swing trade target that I highlighted is the 10500 level which is basically in the middle of the zone. Why sell if this market still has a lot of room to run?
This is the first level to consider locking in SOME profit, not your entire position. IF you got long around the 8690 level, you are up almost 1200 points at the moment. and at 10,500 you would be up 1800. Not bad for 5 days, so why not lock some in? It reduces risk and allows you to outperform the buy and hold strategy in an environment that is not the most stable.
Remember the herd mentality. When markets start breaking resistances and pushing highs, the crowd reacts. This type of reaction, which is now in the form of strength is an opportunity for those who were able to anticipate this move to sell into strength. This is a best practice and the only obstacle in your way is greed. What about the bigger picture trade though?
This is where your perspective, outlook and risk tolerance come into play. The positions that I built as this market bottomed were part of a position trade. I did not use any stops or targets because my outlook is anticipating the broader trend to reassert itself. For my trade, that scenario would be confirmed upon the break of the bearish trend line that was established in January. This would put price around the 12K area. As I hold out for these possibilities, I am taking more risk. The market can turn back at any moment and retest the 8Ks or even lower IF this market goes into a range bound scenario.
So with that said, for my position trade, I intend to lock in SOME profit IF we reach the trend line and get a bearish reversal candle. If on the other hand, price blows through, then there is no reason to sell until the next resistance takes hold which can be in the high 13Ks. If I am going to lock in some profit, I at least want to make sure I have given the market a chance to maximize it. Another way to do this is to use a manual trailing stop which you place at the low of the previous candle. This is a good technique for when you have reached an acceptable profit target, and there is no reason to sell. Just trail the stop and let the market take you out.
In summary, hopefully from the series of my previous reports, you can piece together the process that I covered to build my long position trade in this market. Now that we are at a resistance, I have the luxury I deciding if I want to lock in some profit or hold to see if my bigger picture anticipation plays out. The key point is: from start to finish I have been following a plan and NOT reacting to anything. At the current resistance area, best practices tell me that this is an area to consider locking in profit, and NOT buying. If you missed all the buying opportunities that I have been writing about, and you buy now, you are taking much greater risk and buying into a resistance level. This area is an opportunity for people who want to lock in some profit, not initiate new positions. A break of the current bullish trend line will negate this momentum, so be mindful of that and manage your risk carefully. Otherwise, besides locking some in, the other best practice is let winners run. That is my plan until broader resistance levels are in play.
Marc — you're the man. I've still been reading all your reports, they helped me feel confident taking a position at $6300... and now oh boy am I sitting pretty!!! Cheers!
JuanitaB
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I really like your big picture view.
Some traders I follow do daily comments on their broad based ideas.
Have you considered that? Also, have you considered starting a private trading group where your followers can chat?
Commsky
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Very strong price manipulation going on here.
FenixCapital
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I like this call, I agree with taking some profit here and waiting for a prettier buy opportunity to ride the next wave. Easier to think straight when you're out!
Giovi6969
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This is a very solid and conservative approach to trading, good choice and good luck to you
andrewpomerans
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Marc, When you suggest manual trailing stop on the previous candle low - what chart time frame should this be done at ? 1 day ? 4 hr ? 1 hr ?
xastunts
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@andrewpomerans, i have 3 small windows opened for the BTC/USD charts. 1) 1 min chart, 2) 30 min chart, ) 4h chart. this way i have a very complete picture of how i see btc is moving. if it works for me , it might even work for you!
sumastardon
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Erm a 1000 point resistance zone! Wow. The top of the zone is correct. The rest is imaginary.
kardia
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I am reluctant to use a stop loss because I heard horror stories from people who traded on Gdax and the stop loss wasn't triggered until long after the position it was set for, causing substantial losses. Has anyone had a problem with this? Is there a solution to avoid this scenario other than not using a stop loss at all?
kyloren
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@rev214us, when using stop loss, you get the "best available" price. If the price is rapidly falling you'll suffer huge losses.
@goldbug1 posted some examples recently :