BTC - The Break Out and the Break Down.

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Perfect lesson in how sentiment can change on a dime! Just when we thought we could break out the champagne and party hats celebrating ATH's in our alt coin portfolio, we had to put down the beer and scramble to take off profits and cut losses to avoid a "Potential" meltdown of our alt portfolio. This is sound money management and this is one Rule I never break as much as I want to HOPE the market bounces, more often than not it continues lower.

So what do I do when the market reverses like this?

1) Start trimming off positions in good alt coins that are at ATHs to rebalance the portfolio. (This is minimal of my core 8 holdings)
2) As we have seen this market rotation before, I went to a mix of long BTC and long USD.
3) A few trades I had on alt coins (some that were up 20-100%+) I closed out period! I gave back 20%+ of the profits on several but I'm still up and I can always reenter if the market changes.
4) Look to re-buy coins when they are way oversold. So a reverse trade so to speak going short my trading portfolio by going long BTC with the profits. The BTC/XXX trade.

Bottom line I went into defensive mode. I would rather buy back trades 10% higher than take a 40-50% loss and YES we have seen that before. This is a risk reward in the reverse. I'm risking 10% to avoid a 40%+ loss which is 4:1. It may not be this time, but eventually "a failure to take a small loss will lead to the mother of all losses".

Now does this mean you run out and sell your coins? This is a decision you MUST make for yourself. Many times if I miss the initial selloff (as many that have followed a while remember happening several times at night) so I will look at a retracement level and use that as my stop out, or we often get a bull trap (B wave) which will allow me to cut loose there, or the market simply reverses. I've missed the initial sell signal many times and panicked, sold way low only to see it reverse in a B leg and not pullback to my sell point. But this is something you have to throw up on the charts and look for yourself.

Here is where having tooo many trades is an issue. It was like someone let 14 horses out of the barn and your trying to coral them up and every time you get one in the other is further away . I guess Paul Tudor Jones's statement "Big Positions cause Big Problems" could be modified to "Many Positions can cause Many Problems". I am human and made this mistake here. Every time I went to sell the red bar was longer! Lesson learned!

Either way, BTC has show itself to be a flight to safety during alt market pullbacks, so I am long BTC' and the USD' here with the targets for BTC' shown on the board. This also allows me to quickly transfer and buy oversold coins, some I missed on the previous breakout but remained patient.

Your never out of the market as a trader/investor, your always long something whether it be alts, BTC', Euros or Dollars.

I love when I see triangles and H&S patterns out of context. This was one of those times. The prevailing trend trumps everything, but interesting enough I found two inverted heads and shoulder patterns on the 4 hour chart and the RSI indicator. Understand the difference in seeing a pattern on a chart, and a pattern that is created by prevailing trends. How many Short BTC' and long XXX' charts were out there? "Here's your sign!"

Bottom line timing tops, bottoms, or where a correction will end is only done by liars! Strict Money Management is done by good traders!

I am watching BTC' closely as there is always the possibility of going lower. We are not out of the woods yet. In my opinion we need to break the $16,200 level to confirm liftoff!

Comment: Wave count for those that are interested. Wave counts are subjective.
Comment: This is a zoom in of my cheat sheet. Looking for a consolidation and then a critical level of a resistance.

Comment: This is the one day so you can get a better idea of where I obtained those levels and why.
@goldbug1 Thanks again for the knowledge, sir. Been reading your posts since you had about 50 followers and have learned a ton - and now making good money as a result. That said, just stumbled upon a guy that has to be a genius, and a lot like you, has a really good grasp on psychology as well as TA. Thought if you haven't heard of him yet, you'd love this post in particular - he's quite the philosopher as well:
You're a rock star Gold! Thanks for the great TA...AGAIN! I just realized I have been following you for months and don't think I have ever left a comment so I just wanted to say thanks and express how grateful I am for your in depth posts. I love the perspective and multiple angles you provide along with your TA. The "reasons why" are more valuable to me than seeing someones take on a chart as I feel it gives a better understanding of market sentiment and why traders buy, sell or HODL. I always look forward to your post and rarely will enter a trade until I have seen your update :) Thanks again and Have a great weekend!
it looks like go to your T3 step by step?

I just shared this on a private FB group i'm in with a bunch of good friends. It's super active. It's always active all day everyday. Thank you thank you. Us rookies need this so bad.
nice dude..really nice dude
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Phenomenal info my friend. I came back to this article because I kept the 16200 threshold in mind before in again; what do you know, IT IS LIFTOFF.
+1 Reply
love new markings with proper wave degrees! thanks
Thx for your explanations, I really appreciate it!
Dude, I wish I had paid attention to your cheat sheet. I had the pullback set at 16100, sold there, and missed $200 in pullback on the consolidation. GOOD WORK.
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