Bitcoin - The Enthusiasm Warns of Caution! SchizoExcitement
Initially we assumed that we had completed the 5th wave of the interim fractal cycle, and one of our followers MdF_Trading, who I have known since day one of joining TV, mentioned it could be a broader correction. It appears initially that this may be the correct call and we are just completing wave 5 in the interim cycle and based on the enthusiasm it seems more likely this is the case.
It is also plausible we have entered the 3rd wave of a broader move, which by the nature of Bitcoin in general should be parabolic. Either scenario is completely plausible and it is really not significant in the long term view of the broader cycle. Shorter term fractals are more difficult to identify due to noise so we rely on our weekly chart as an overall guide for positioning.
I have adjusted my count slightly with the assumption we are still in the initial 1st wave of the broader move. Right or wrong is insignificant, the trend is still in tact, and the market is pointing to higher prices over time. Though we downplay the interim cycles, we do base our positioning on it, as we shaved off some risk around the 8900 level. We did not get completely out of the market, but our strategy at various important levels is to trim off some risk and build a small cash position.
For those that have been following for years, I have spoken before on the 70/30 portfolio strategy where we never want to be completely out of the market, but we do want to build up cash where the probability favors a pullback. If we are wrong, and the market continues higher, 70-80% of our portfolio is catching the move, and we can use the cash to position into the market when the market provides an opportunity.
Thinking you are going to catch every swing with 100% in or out of the market, will eventually lead to missing a large move, or being caught in a huge selloff. Taking profits or reducing risk is a conservative measure and balances the risks of being wrong. Though many new to trading and investing think it is about being right or wrong and all in all out all the time it is simply not. It is about being prepared all the time, and like buying a PUT on a stock that rallied, trimming off at resistance levels, is simply an insurance policy in the event the market sells off.
The current push through 8500 & 9000 confirmed we are still likely in an initial impulse swing and the target area for completion is between 9750-11,100. There is a potential for a failed high situation here and this can not be ignored, especially with all the enthusiasm surrounding this move. Sucks in late longs only to blow them out before moving higher. Do not let confirmation bias into your strategy, it is important to look at all scenarios and if we do not get a close above 9k today it would add more weight to a bullish fake out situation.
We had staggered orders in recently to try and catch a pullback, but none were filled. It happens and if you are new to trading and investing it is something to get used to. Over the years of investing both short and long term, I have missed more pullbacks than I have caught. At first this can be frustrating, but over time you just accept it as the norm. We still have 70% of our position on and are getting the bulk of any move higher, and if this does pullback into the low 8k's we have cash to act accordingly.
From here out pullbacks are likely to be shallow and as enthusiasm increases, the probability of a deep correction decrease as we have compared numerous times to Gold. Both short and long interest are increasing at a staggering rate which brings a mixed signal and provides the opportunity as we saw back in late May for larger operators to squash both side of leveraged trades. This is what I would be cautious about.
Though I repeat the phrase often, some still do not get it. It is not about being right or wrong but being prepared. IF we move higher, we still are over weight the market and will benefit from increasing prices. IF we do pullback we have the cash to take advantage of either buying a pullback or positioning into laggards. There is always an opportunity to think you missed one is naive and silly.
Patience an preparing is key. The chart is still pointing higher, and we will be looking to position accordingly in the future.
It is also plausible we have entered the 3rd wave of a broader move, which by the nature of Bitcoin in general should be parabolic. Either scenario is completely plausible and it is really not significant in the long term view of the broader cycle. Shorter term fractals are more difficult to identify due to noise so we rely on our weekly chart as an overall guide for positioning.
I have adjusted my count slightly with the assumption we are still in the initial 1st wave of the broader move. Right or wrong is insignificant, the trend is still in tact, and the market is pointing to higher prices over time. Though we downplay the interim cycles, we do base our positioning on it, as we shaved off some risk around the 8900 level. We did not get completely out of the market, but our strategy at various important levels is to trim off some risk and build a small cash position.
For those that have been following for years, I have spoken before on the 70/30 portfolio strategy where we never want to be completely out of the market, but we do want to build up cash where the probability favors a pullback. If we are wrong, and the market continues higher, 70-80% of our portfolio is catching the move, and we can use the cash to position into the market when the market provides an opportunity.
Thinking you are going to catch every swing with 100% in or out of the market, will eventually lead to missing a large move, or being caught in a huge selloff. Taking profits or reducing risk is a conservative measure and balances the risks of being wrong. Though many new to trading and investing think it is about being right or wrong and all in all out all the time it is simply not. It is about being prepared all the time, and like buying a PUT on a stock that rallied, trimming off at resistance levels, is simply an insurance policy in the event the market sells off.
The current push through 8500 & 9000 confirmed we are still likely in an initial impulse swing and the target area for completion is between 9750-11,100. There is a potential for a failed high situation here and this can not be ignored, especially with all the enthusiasm surrounding this move. Sucks in late longs only to blow them out before moving higher. Do not let confirmation bias into your strategy, it is important to look at all scenarios and if we do not get a close above 9k today it would add more weight to a bullish fake out situation.
We had staggered orders in recently to try and catch a pullback, but none were filled. It happens and if you are new to trading and investing it is something to get used to. Over the years of investing both short and long term, I have missed more pullbacks than I have caught. At first this can be frustrating, but over time you just accept it as the norm. We still have 70% of our position on and are getting the bulk of any move higher, and if this does pullback into the low 8k's we have cash to act accordingly.
From here out pullbacks are likely to be shallow and as enthusiasm increases, the probability of a deep correction decrease as we have compared numerous times to Gold. Both short and long interest are increasing at a staggering rate which brings a mixed signal and provides the opportunity as we saw back in late May for larger operators to squash both side of leveraged trades. This is what I would be cautious about.
Though I repeat the phrase often, some still do not get it. It is not about being right or wrong but being prepared. IF we move higher, we still are over weight the market and will benefit from increasing prices. IF we do pullback we have the cash to take advantage of either buying a pullback or positioning into laggards. There is always an opportunity to think you missed one is naive and silly.
Patience an preparing is key. The chart is still pointing higher, and we will be looking to position accordingly in the future.
Comment:
For those of you that are long, and have a trade on do not fall into the euphoric state of shorts are getting creamed, and we are going to 10k as if it is going to happen today or tomorrow. Maybe we do, maybe we don't, but this is setting up for a large operator to take advantage of longs chasing this rally, and shorts piling into a potential pullback.
Often when we see this type of behavior, especially when everyone is bragging about their trades, or calling for moon rockets, it is a perfect setup for large operators to dump into the market, squeezing out longs. This attracts the typical short trader, especially if the daily closes out as a pinbar, and as they sell into the buy orders already put in place, the market fakes out to the short side and goes long. This is where we want to enter, and this is the risk right now in the market. Regardless of whether it happens or not, the risk is there, and it is something to be aware of. If there is a sign posted at the beach, "sharks spotted in the area" you probably need to get out the suntan lotion and stay on the beach.
Often when we see this type of behavior, especially when everyone is bragging about their trades, or calling for moon rockets, it is a perfect setup for large operators to dump into the market, squeezing out longs. This attracts the typical short trader, especially if the daily closes out as a pinbar, and as they sell into the buy orders already put in place, the market fakes out to the short side and goes long. This is where we want to enter, and this is the risk right now in the market. Regardless of whether it happens or not, the risk is there, and it is something to be aware of. If there is a sign posted at the beach, "sharks spotted in the area" you probably need to get out the suntan lotion and stay on the beach.
In my hastiness to go golfing this morning I hit the wrong button so here is the chart that was supposed to print above.