This is good for beginners and even the experienced trader!
Don’t buy the dummy, Don’t be the dummy as BITFINEX ETH/BTC drops.
The chart shows a nice uptrend with price back and testing the 20 day moving average. In most circumstances a clear buy opportunity but there are a couple of warning signs for the inexperienced trader here.
1/ Note the consistent drop of , the lower the the more likely false break outs caused by a small number of market participants having more influence than they do in higher markets.
2/ Our Triangle is a perfect indecision shape and shows a market not clear whats next (Many BTC Charts showing uncertainty, we will clear this up in another post). Triangles often break about 2/3 of the way in so we arewell due a break out.
3/ While our trend is up we have entered the triangle from above and this makes a case for the breakout to be short, we have a long trend so an unclear picture.
The 3 points above make this market not clear for us, and we need to be cautious.
There is a break out not far away, I will stay out of the first leg in case the low creates a False breakout and traps traders on the wrong side of the market.
I will wait for a pullback (preferably to the triangle), and a bounce back in the direction of the first move. I am looking for a simple (Price Advances, comes Back, Continues in the original direction), combined with a rise in .
Long is my bias but I will let price lead me in either direction here. If I get my scenario in either direction I will be prepared to trade in that direction.
By staying out of the first leg of the move I do risk missing the move, but I also miss the high probability of a false break and losses. I hate losses.
Remember to make Dollars your decisions need to make Sense, stay calm and focused in these markets and plenty of good trades will come.
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