True selling does not hold range supports, it breaks them. This market went from the 6600 area to 6100 in a matter of minutes and has simply stopped. While slowly making its way back into the middle of the range. If it is not weak, then it should be strong, right?
Not necessarily. Again for those who do not have the ability to understand the way we evaluate markets, we make judgements and decisions on MARKET STRUCTURE. The thing to remember is not everything shows up on the charts, there are things like context and market internals that can also present red flags.
Before the sell off, we were all about the minor which implied strength. On the day of the sell off, we noticed a glaring discrepancy in the prices between Bitfinex and Coinbase which is a reflection of the Tether situation (not obvious on a chart). We did not know the market was going to sell off as fast as it had, but we did issue a warning about taking precautions hours before the sell off.
Our swing trade long was stopped out in the low 6400 area, and even though our outlook is still long term , we are waiting until a clear sign of strength appears. A couple of small bars do not meet our criteria for any new swing trades.
So now what? Even though this market remains neutral, the current structure in place could be a bull trap. If the Bitfinex price cannot close beyond the well established , a retest of 6K is more likely.
A close above the 6500 area would be an obvious sign, while a retest and failed break of the 5700 area would be much less obvious. Unlike so many, we know how to WAIT, and let the market come to us (which is why we did not lose 30% over the previous month).
The market will choose and we will adjust. Please realize reacting to price information is unproductive. Just ask all the trolls who got short and are now a little uncomfortable while waiting for 3K.
In summary, this market is NOT trending and must prove itself one way or the other. The levels are clear, it is a matter of letting it reveal its hand. If it's a hand, we step aside, but if it's , we have our specific criteria to justify a new swing trade entry. We follow a plan, not entertain our hopes, feelings and impulses. Those who prefer drama, there are day time soap operas for that (or the mainstream financial news).