Sometimes it can be hard to be bullish in a bearish market. On this, the first day of November, we have competing psychological ideas that are swirling around the mind space of the Bitcoin market. On the one hand, we know that overwhelmingly the market has been bearish, for most, disastrously so. We should know, as traders, that it's generally unwise to trade against the trend, because you are removing your statistical advantage. If you know on average that the river flows a certain direction, then you are taking unnecessary risk trying to swim the opposite direction of highest likelihood. To be a successful trader, you need to act like a casino, and stack the odds in your favor. Then, you discipline yourself to only act on setups that have a high statistical likelihood to go in the direction you want them to go. This is how you maximize your success, and reduce your losses.
On the other hand, we know that all things are cyclical. Bitcoin in particular has a cycle of ending the year strong beginning in November. How many of us find it difficult to erase the bullish euphoric memories of November 2017, when every coin and it's sister began skyrocketing as if a literal fire had been lit underneath of them?
Allow me to suggest that we should look at the market with clear eyes, and do our best to remove our bias, whichever way they may lean us towards. We must simply, robotically even, look at what the statistical likelihood is, and enforce our trading discipline to only take setups that are in our favor. What is the statistical likelihood of Bitcoin's price action?
Well, allow me to put some things into context. Let's look at the support level that has held Bitcoin's price above, for the most part, 6,000. Is it likely to hold? Well, how many times has that support level been tested? As indiciated in the first chart, it has been tested, after it was initially broken back on Oct. of 2017, 4 times. Each time has led to a reversal, the first reversal skyrocketed us all the way up to 19k, the second to 11, the third to 8, and the fourth to 7. These are approximate numbers, but you see my point. Each time the reversal moves on decreasing momentum and volume, and isn't able to put us into an established uptrend as we would all love to see.
Another factor to consider is the idea of support strength. Think of any physical object. The more it is strained, the less likely it is to hold. In trading, the more times a support level is tested, the more likely it is to crumble under pressure. We can see this evidence by Bitcoin's price movement that I described in the last paragraph. Imagine the support at 6k like a springboard. Each time price bounced off of it, it bounced hard the first time, but the second time some of it's elasticity had been removed by absorbing the impact of a fall from 19k. The second bounce therefore was less powerful, resulting in a weaker movement. Again, we burden the support line, which has even less strength and elasticity to propel price upwards. Now we see that price is barely able to hold above support at all. How much elasticity and strength do we think this support level has left to help us?
Now I've drawn a Fibonacci retracement from each bounce off of support to it's top, and fascinatingly (sarcasm, if you understand Sacred Geometry you should know there's nothing new under the sun) we see that each subsequent top is approximately equal to a .618 retracement of the last movement. With this one simple trading tool in your arsenal, you can do amazing things in any market. Just understanding the cyclical nature of things, and how underlying mathematics sway group psychology. Why was price attracted to that particular price level, which corresponds with the Fibonacci retracement? Because that same mathematical formula underlines the physical construction of those market participants very cells.
So applying that same formula, we can predict a price for the next re-test of support.
That is assuming that support does hold, because like a rubber band, the more times you stretch it, the faster it will break.
On the other hand, we know that all things are cyclical. Bitcoin in particular has a cycle of ending the year strong beginning in November. How many of us find it difficult to erase the bullish euphoric memories of November 2017, when every coin and it's sister began skyrocketing as if a literal fire had been lit underneath of them?
Allow me to suggest that we should look at the market with clear eyes, and do our best to remove our bias, whichever way they may lean us towards. We must simply, robotically even, look at what the statistical likelihood is, and enforce our trading discipline to only take setups that are in our favor. What is the statistical likelihood of Bitcoin's price action?
Well, allow me to put some things into context. Let's look at the support level that has held Bitcoin's price above, for the most part, 6,000. Is it likely to hold? Well, how many times has that support level been tested? As indiciated in the first chart, it has been tested, after it was initially broken back on Oct. of 2017, 4 times. Each time has led to a reversal, the first reversal skyrocketed us all the way up to 19k, the second to 11, the third to 8, and the fourth to 7. These are approximate numbers, but you see my point. Each time the reversal moves on decreasing momentum and volume, and isn't able to put us into an established uptrend as we would all love to see.
Another factor to consider is the idea of support strength. Think of any physical object. The more it is strained, the less likely it is to hold. In trading, the more times a support level is tested, the more likely it is to crumble under pressure. We can see this evidence by Bitcoin's price movement that I described in the last paragraph. Imagine the support at 6k like a springboard. Each time price bounced off of it, it bounced hard the first time, but the second time some of it's elasticity had been removed by absorbing the impact of a fall from 19k. The second bounce therefore was less powerful, resulting in a weaker movement. Again, we burden the support line, which has even less strength and elasticity to propel price upwards. Now we see that price is barely able to hold above support at all. How much elasticity and strength do we think this support level has left to help us?
Now I've drawn a Fibonacci retracement from each bounce off of support to it's top, and fascinatingly (sarcasm, if you understand Sacred Geometry you should know there's nothing new under the sun) we see that each subsequent top is approximately equal to a .618 retracement of the last movement. With this one simple trading tool in your arsenal, you can do amazing things in any market. Just understanding the cyclical nature of things, and how underlying mathematics sway group psychology. Why was price attracted to that particular price level, which corresponds with the Fibonacci retracement? Because that same mathematical formula underlines the physical construction of those market participants very cells.
So applying that same formula, we can predict a price for the next re-test of support.
That is assuming that support does hold, because like a rubber band, the more times you stretch it, the faster it will break.
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Copy Trade Me On Fairdesk - Earn While You Sleep!
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