You cannot react to what you see on a chart. What you SEE is NOT what you GET. We cannot see what is going on inside the candles. When I made the video, price looked weak and looked like it was going to break lower BUT the support was never cleared.
In these situations, you have to let the market show its hand. Let it make the first move, and don’t get in its way. How many online “experts” were saying “Bitcoin bearish”? They react to what they see, and ignore the probability. All it needs is a catalyst and price can squeeze quickly.
We sent out a swing trade idea for ETH which was based on this Bitcoin price location. Like I mention in the video, from here, price can easily reach the 34 to 36K area since that is the mid point of the consolidation. Reward/risk for longs is VERY attractive in this area since 28.5K is the point of reference.
If you weren’t willing to take risk at much more attractive levels, why would you think these levels are any better? Because it “looks” stronger? The more effective thing to consider is what you CAN’T SEE. The 35K area is in the middle of the recent consolidation between 28.5K and 41K. Often these locations are highly random in terms of price action and if anything offer a better opportunity to reduce risk, NOT put on more.
If the price closes STRONG beyond 35K, that increases the chance of testing the higher part of the range of the 41K area over the next few days. Some of our profit targets our within the 35K to 40K area for this reason. In order for the bearish structure to be negated, price needs to close decisively ABOVE 41K.
What makes new trades in this area so risky is this: price can easily find resistance as it nears 40K. It can reasonably fail and test the low 30s again. If you buy at 36K for example, and it goes to 38K and turns back, you have to basically risk between 6 and 8K to potentially gain 2 to 4K. You cannot generate positive returns over time with this kind of ratio.
At this point, if you are not in, the BEST thing to do is WAIT for the next opportunity. The two scenarios we would consider are 1) Price tests the 30K area again followed by a new buy signal and confirmation or 2) price clears 41K and then pulls back and establishes a new support level to define risk from. Scenario 2 means the entry price can be much higher, BUT in this situation, the broader price structure will be much more favorable than it is now. We have no problem forfeiting lower prices for a more favorable environment (bullish structure rather than consolidation).
Keep in mind this process can take days or even weeks to play out. Over the recent month we have shared three Bitcoin signals to give you some perspective in terms of the frequency of our rules based LONG only swing trade strategy. If you take more trades than that, and you are not a day trader, then you are over trading because there aren’t that many quality opportunities in this environment. Minimizing price noise is one great benefit to having a well defined set of rules.
If you would like to know more about how our swing trade strategy works, please visit.
We had sent out trades off of the 34,500 and 39,500 areas respectively, only to get stopped out upon the failure of breaking beyond 40K. We new the risks, and were willing to accept them. While many are now calling for a bear market, not much has changed in the bigger picture to justify such a call. 30K is a key support area that price attempted to clear, but as you can now SEE, it failed to follow through. This type of fake out is a CLEAR sign of strength.
IF the buy signal goes into effect, the 40K resistance area is a good reference point to measure reward from, while the 28K low is where risk can be measured from. 5K potential risk for 7K potential profit is greater than 1:1 and within the scope of our strategy rules. While everyone is over reacting, jumping to conclusions and asserting irrelevant opinions, we simple evaluate price action to see if it aligns with our rules. If yes, we can take a trade, if no, then we stand aside. It is THAT SIMPLE. And since we do not short Bitcoin, that side of the equation is not even a factor. You don’t need to be on both sides of a market to come out ahead.
This simple rules based swing trade philosophy is not perfect, because we do get stopped out, BUT it also filters out countless fake outs and would be stop outs that can empty an account quickly. Most do not realize, this game is more about defense than it is anything else. People chase profits but without a way to protect them, you will only give them back plus more anything so over the long term the effort is pointless.
As far as the bears go, and calling for a bear market, Bitcoin is still way off from such a scenario. The 30K area is a potential higher low of a broader bullish trend. In order for a bear market to even be considered, price would have to take out 20K or even 15K in order to provide evidence.
If you would like to know more about our rules based swing trade strategy, visit.
We WAITED 3 WEEKS for this HIGH probability, but aggressive trade signal. And our reward/risk is about 2.5 which is more than adequate.
If the bullish momentum can be maintained and 40K is cleared, then it is within reason to see the mid 40Ks and possibly even 50K trade over the next week or two. The thing is if you are not in this, you have to take much higher risk than we had to because of the counter trend nature of the trade and where the main support is which is 30K. By getting long now you are in a much more vulnerable position because if 40K isn’t cleared, then 30K can be tested again.
How many trades did you take in Bitcoin or any of the alts over the previous 3 weeks? We took none. If you got caught in the noise near the 40K resistance, you may have taken a loss or two or maybe you are still in and at the mercy of the market. The lesson to be learned here is: if you took a trade as a result of some hype, following some “action” oriented guru, or from a lack of patience, you are most likely reacting to information. Reacting will lead to random rewards over time, and those rewards often reinforce ineffective behaviors.
I emphasize that we did NOTHING for 3 weeks except watch. NOTHING does not require any effort. High probability opportunities are RARE, especially on the swing trade time frame. If you want to improve your timing and improve your account, learn to WAIT, and have a predetermined scenario in mind. I have been talking about a potential double bottom or higher low around the low 30K area for weeks. Once the scenario develops, we are prepared, and once it confirms, ONLY then can we assume risk. Totally different from “reactive” trading which is a key trait of the herd mentality.
At this point, another buying opportunity can develop IF price establishes a higher low off of the 34 to 35K area. And if it doesn’t and you miss the trade altogether that’s okay, missing out is part of the game. And the good news is: missing out doesn’t actually cost anything.
If you would like to know more about our LONG only swing trade strategy. visit.
Price patterns alone like the consolidation developing should not be considered in isolation. Many are calling for longs, and are unable to control their emotions or “fear of missing” the next move. In terms of the rules we employ, there have been a couple of recent buy signals but we choose to AVOID them. Why?
Sometimes it is better to forfeit better prices in exchange for a better environment. Bitcoin needs to prove that the previous bearish momentum is no longer in control and offer a more stable environment. To accomplish this, the 40K resistance must be taken out. From that point, we will then look for the next buy signal for a swing trade.
Patience plays a VERY important role in our trading process. If you think about it, patience requires no effort, special knowledge, special tools, etc. You just do NOTHING, and the best part is if we are wrong to do nothing, we don’t actually lose anything. All we have to do is wait for the next setup. It sounds easy, but MOST people have a very hard time WAITING.
IF on the other hand, Bitcoin breaks 33.5K, the next support to be tested is likely to be 30K. IF buying activity fails to hold it there, the 26K and 20K levels are next in line to consider. This is the RISK traders face by buying at the current prices whether they realize it or not. Like I mentioned earlier as of right now, the broader structure favors the bearish scenario.
This philosophy also carries over into the alt coins as well. No matter how you slice it, Bitcoin still leads. It doesn’t matter how compelling your alt coin chart looks, or how many buy signals appear. IF Bitcoin breaks, they will most likely follow. This is why we regularly remind our followers not to take on too many positions in the alt coins because it is basically it is just one big Bitcoin trade.
If you would like to know more about how our swing trade strategy works, visit us.
This lack of bullish momentum may lead to a continuation of the recent bearish structure since the 40K support break. Even though there is a double bottom around the 30K area, it is still within reason for this level to be taken out over the next few days.
Two important points to consider: First, we chose to avoid the recent buy signal because the RISK is too high. The average risk in recent swing trades has been between 3 and 5K. The size of the recent bullish candle off the 30K low is about 8K points. If we got long around 39K, the price would have to run to 47K to justify the risk. The chances of reaching such a target to justify 1:1 risk are much lower NOW.
This brings me to my second point: The 40K level was a short-term trend support. This means in order to anticipate the bullish trend to continue to new highs in the near term, this support had to be maintained. The fact that 40K has been compromised means we adjust our short-term expectation from bullish to range-bound.
In recent videos, I have talked about the potential Wave 4 consolidation. Such an environment is often filled with false starts, false breakouts, and a lot of noise. Similar to XAUUSD from the August peak, it can persist for many months. This means we adjust profit and risk expectations and place more emphasis on the range low for opportunities (which is 30K at the moment). MOST altcoins will likely follow.
If you would like to learn more about our swing trade strategy, visit.
It just goes to show: No one knows anything (unless they are an insider in which case it is not in their best interest to share it). There are two points I want to make in this analysis: 1) listen to price not people, and 2) the 40K support break confirms a change in our long term outlook.
Was there anything in the charts that could have helped us determine that price was going to retrace so dramatically? NO, but there were plenty of clues that pointed to the price being highly vulnerable to a pull back, especially in the 65K area (watch my previous videos). Off of the 55K area, I was looking for a retrace to the 52K or 50K to 48K areas for a bullish reversal. Bitcoin reached our anticipated supprots, but it never confirmed. Having specific rules in place kept out OUT of a market that was in the process of pulling back about 20K more points.
This is why it is so important to listen to price and not people. How many experts were stepping in front of this move too early becasue they felt “how much lower can it go?”. Right now price is attempting to stabilize with the development of an inside candle. IF it can hold, and the high of the candle (around 41K) is taken out TOMORROW, that would qualify as a swing trade signal for a very aggressive long. Why aggressive? Because the mid term trend is no longer bullish, it is now range bound.
Which brings me to my second point: I have been talking about the potential of a broad Wave 4 corrective consolidation for months, but required a key support to be taken out in order to confirm. That level was 40K. This means we now adjust our profit and risk expectations to a market that will likely be in an erratic consolidation for the next 6 months or longer. (See spot Gold from August to March for an example of what Bitcoin may look like).
This means reasonable profit targets will be into the low 50Ks unless Bitcoin can prove otherwise. Keep in mind, IF the current bearish moment persists, it is well within reason to test the low 30Ks again since a range bound market often tests its boundaries multiple times. The idea is to let the market show its hand and then adjust, not try to force your hand on the market.
If you would like to know more about how our swing trade strategy works, visit.
In these situations, everyone grasps for “why!?”, but as I remind our followers regularly, if you follow PRICE action, “WHY” does not matter, RISK is what matters. If you go back and watch all of my previous analysis videos, I have been warning against the high risk and low probability for those insisting on taking trades between 55K and 60K. Don’t listen to people, listen to PRICE.
And again I have to point out, all through the Bitcoin consolidation and Ethereum new high after new high herd mentality event, who was calling for Bitcoin to test 46K? When Bitcoin was at 60K, once again, the “authorities”, “experts” and “gurus” were all calling for higher prices. Either that or hyping some overpriced alt coin. LISTEN to PRICE and focus on RISK.
As of now, Bitcoin is showing a candle tail off of the 45950 AREA, which is a sign that buying activity came in around the 46K to 48K area. I have been talking about the 50K to 48K major support for weeks, and WAITING to see if Bitcoin would offer such an opportunity.
NOW we have a much more attractive level for swing trades BUT stepping into a market that has yet to prove stability is still not a good idea. The bearish momentum from the large red candle that started in the 55K area may still be in play. This is why we now have to WAIT for price stability in order to prove that the broader bullish trend and range low support are both still intact. One candle which hasn’t even closed yet is NOT enough information.
For the next couple of days, I want to see a bullish reversal candle develop between 48K and 50K. OR even better, I want to see a retest of 45K, followed by another bullish reversal (double bottom). In those instances, I will be able to clearly define risk, while reward potential is much more favorable at these levels compared to 55K or 60K. PATIENCE is key.
Keep in mind, high probability / low risk opportunities are infrequent and not easily recognizable. While the low probability, high risk opportunities are usually everywhere and look obvious (like ETH pushing high after high without a pullback). It took almost two months for this opportunity to develop, so NOW is the time to be looking for confirmation. This is what we WAIT so patiently for, but even now, price needs to prove itself further before we can justify taking a new risk.
In my previous video, I highlighted a number of price scenarios and one of them were a higher low established off of the 52K area. We almost got that one, except that price, refuses to break 53K. For shorter time frame strategies like day trading, these sharp single candle moves offer excellent opportunities, but for swing trades, the risk is too high.
Here is what I mean: If we go long at 58K, proportional risk for a swing trade is now around 53K which means I have to risk at LEAST 5K points. In order to justify this, Bitcoin needs to push to 63K in the next leg just to reach a 1:1 reward/risk ratio. The probability of that scenario is much lower compared to if I bought around 50K, risked only 3K points, and required a retrace back to the middle of the range (55 to 58K area). The probability of a retrace back to the middle of the range is much greater than of the range low.
Since we trade rules for our swing trade strategy, we have no choice but to wait this out. Bitcoin either tests the range low again, (between 52K and 50K) and provides a setup, or we don’t assume any new risk. Waiting for the right level and setup is much more effective when it comes to returns over time compared to taking numerous low-probability trades. Many traders and investors don’t realize, over time, the losing trades cost way more than the few random wins from chasing action.
If you would like to know more about our strategy, please visit.
Is this the norm? It is tough to define “norm” for Bitcoin, but none the less, the 51,300 entry price was taken out and Bitcoin has been gyrating around 54 to 55K ever since.
So if you missed this swing trade, what is the best way to adjust and prepare for the next buying opportunity? And why not buy it now?
Let me answer the second question first: we don’t buy now for a swing trade because we don’t chase moves where the reward/risk is no longer attractive. It is that simple. If price continues higher from here, it does so without us because we focus on risk and sometimes that means letting a trade go. Effective risk management is what leads to consistency, NOT big wins.
As far as preparing for the next buying opportunity: IF Bitcoin can retrace to the 52500, to 53500 area and produce a bullish reversal, that would be a higher low. Risk can be clearly defined off of such a structure and we will be prompted to share a new swing trade long idea if the scenario materializes.
A more extreme bullish scenario would be a test of the 48K area a second time which would be a potential double bottom (similar to Gold off of 1675). IF a bullish reversal can materialize here, it would be an even more attractive swing trade long idea in terms of reward/risk.
It is also possible that Bitcoin gyrates within a very tight range around 55K for a few days while establishing a momentum continuation pattern to go higher. In this situation we will be open to taking on a new swing trade long, but it will be categorized as an aggressive trade since the location is less than ideal. In this scenario, at least there is a pattern to define risk from.
I just presented the main criteria that price needs to meet before we consider assuming any new risk. In other words, we take positions based on rules, not feelings, opinions or reactions to information. If Bitcoin does not align with the rules, whether it runs or not, we do not put on any new risk. Rules promote consistency.
If you would like to learn more about our analysis, perspective and signal service, visit here.
At this time, 50K is still the key support that is in play. That means it is still very possible for a retest of this area, followed by a bullish reversal. That is the scenario we are waiting for because it offers the best reward/risk along a greater population of participants looking to buy. How do we know? The initial test of the 50K area support didn’t even touch 50K, which can be interpreted as plentiful buying activity (see recent candle stick tail).
IF price manages to make the slight lower low, the mistake to avoid is to step into it too early. It can be very tempting, but waiting for confirmation (a bullish reversal pattern), helps to minimize getting caught in a support break or dramatic sell off. The trade off is you will not enter at the best possible price, but the good news is you don’t need to. Momentum on your side more than makes up for having the best price. Don’t seek perfection in an arena where it doesn’t exist.
So we WAIT. No predictions, no hunches, no opinions. Bitcoin either aligns with the strategy, or we don’t assume any risk. As many “gurus” will not tell you (because they are too busy putting out “action”), high quality opportunities and setups are infrequent and RARE. Over a one month period we have only been seeing maybe 2 or 3 at most in recent months on the swing trade time frame. That translates to maybe 1 per week. More trades than that? You are either over trading or day trading.
IF the 50K support breaks, it can lead to a test of the 48K to 45K area quickly. This scenario will also put a lot of pressure on many of the overly hyped alt coins as well. Keep in mind, risk should be your first priority, not profits. With this philosophy in mind, if 50K breaks, and you have a lot of exposure to alts, it may be a good idea to lighten up even if it means absorbing a smaller loss along the way. Going into “HOPE MODE” is not a strategy, nor is it healthy for your account over the long run. Hype and the herd mentality have been at euphoric levels recently, and when the space goes out of favor, many will be stuck in coins that are not worth anything even close to what they paid for them.
If you would like to know more about our long only swing trade strategy, please visit.
Bitcoin pushed all time highs to 65K and is now showing signs of indecision. While there is no sell signal in place at the moment, here are some important considerations when it comes to judging momentum follow through. This is especially important if you bought into the recent break out.
The 61300 to 64250 area is another reversal zone relative to Bitcoin’s recent price structure. Price is now hesitating in this zone and a break of 61300 would constitute a new sell signal in terms of our swing trade strategy.
This sell signal is not what you want to see develop after such a break out. It can be met with more dramatic selling pressure thanks to all of the new longs lured into the market during the break out.
The first support is now around the 58K area (where price spent a lot of time lingering), and the second support is still around the 50K area. The next resistance is still around 66K (which was almost reached in the recent break out).
It is also possible to see a trend continuation pattern develop over the next day or so IF the 61300 low is NOT taken out. In the current market environment, which has been lacking any significant retracements, this patterns have been very common. This would be a good sign if you are still long.
Break outs are tough trades to take because of their highly random nature. The key to making such a strategy work is to be able to exit the trade quickly if the break out turns out to be false. Many small losses can accumulate this way, but that idea is to catch the broader move when one follows through.
Patience. Most people don’t have it because they let their emotions run rampant. It is not surprising when you have droves of self appointed authorities and other fake gurus amplifying this fear of missing out, or over dramatizing a minor random pullback like Bitcoin is showing now.
Identifying quality opportunities begins with a set of very well defined rules. That does not mean they have to be complex rules, they just have to be adhered to. For example, one of our rules that is part of our long only swing trade strategy is to buy only at supprots upon confirmation within the context of a broader bullish trend. Since we don’t short Bitcoin, we don’t have to worry about that side of the equation, even within a persistent bearish environment (it doesn’t cost anything to stay out).
So where is support right now? On the time frame that we utilize, it is between 52,500 and 49,500. That is a pretty wide range, but based on the recent proportions and price structure, that is where support is defined. Price is no where near this area which means our rules clearly say: stay out.
Probability favors buying activity in the low 50K area and that can further be confirmed by price action. Instead of predicting moves, we let the market show its hand in areas where we anticipate a particular kind of activity. If Bitcoin can’t produce a compelling setup in an area of interest, all we have to do is stay out and wait. No stress, no fear of missing out, just following the rules.
Do we miss trades sometimes as a result of waiting for rules and confirmations to align? Sure, but we don’t lose any money from missing a move. These words may be easy to understand, but putting them into practice means going against your own bad habits and emotional baggage.
Improving your performance begins with developing your capacity for patience, not more and more information. High quality opportunities, especially on a swing trade time frame are INFREQUENT. If you are putting on more than 1 or 2 trades per WEEK, then you are not swing trading because that frequency is just not realistic in this slow environment.
As long as the trend stays bullish, we will be evaluating supports. IF price breaks below 48K, then we reevaluate the broader trend, not call for a bear market like so many will in such a scenario.
The area between 58K and 62K is a proportional reversal zone which has demonstrated its ability to hold price back previously. If price is going to fake out again, it is most likely to do so within this zone. So is it worth taking the chance that it breaks out? A rational answer can come from evaluating the risk.
Assuming you buy for a swing trade upon the break out at 61K, and the next daily candle closes red, you are likely caught in a fake out. The next support is between 53 and 50K. If you choose to give the broader trend a chance to follow through, you are looking at 8K+ points of risk. This means in order to justify such a trade, Bitcoin needs to push 68K just to reach a reward/risk ration of 1:1. While anything is possible, that is a lot of risk to take for a market that has to make a huge effort. All while facing a high probabily bearish reversal zone.
Some may wonder: why does the stop have to be so far away? Placing stop orders effectively requires respecting market proportions. Placing a stop order at a level you “feel” is appropriate for your risk tolerance is not relavant to the market. Bitcoin doesn’t care about how much you want to risk. This is why many traders get stopped out prematurely. The 50 to 53K area support is proportional to the time frame that we utilize for our strategy.
The best thing to do in this situation: nothing. When there is no attractive level, no setup, no confirmation, then why assume any risk? I repeat this often: we trade rules. It is the rules that produce results, not our thoughts, feelings or opinions. Waiting this out means waiting for the 50K support area to be tested again, OR price breaks out and then presents a momentum continuation pattern near the 58K area AFTER breaking out first.
If you are driven by fear of missing out, that usually means you do not have a clearly defined set of rules. If you would like to know more about how our swing trade strategy works, visit.
On the time frame that we utilize for our long only swing trade strategy, Bitcoin is nearing the 50K major support area. I have been talking about a potential retrace to this important price location for weeks. A retrace to this area is nothing more than a healthy pullback within a broader BULLISH trend.
In these situations, probability favors buying, not selling. The key is to wait for the proper setup and confirmation because the level alone is not enough. One potential setup I would like to see develop is a bullish pin bar. If it appears and confirms, I would be prompted to share a new swing trade long idea.
IF price decisively breaks the 50K support, then bearish momentum is likely to lead to a test of the 45 – 46K area support. In this scenario, the BROADER trend is still bullish and I would still be looking for a buy signal.
IF 40K is cleared, that is when we have to reevaluate the broader trend.
If you would like to know more about how our long only swing trade strategy works, visit.
What many traders and investors fail to realize is that price location carry probabilities. This means buy and sell signals can be assigned a loose probability which can offer a better guide when it comes to decision making.
Case in point, since the sell signal off of the 60K area, Bitcoin’s price has found temporary support around the 55K area and produced a bullish pin bar and a signal to go long (break of pin bar high). We had no intention of getting involved in that because the price location (mid 50Ks) was not favorable at all. Coming off a failed high and no price structure or stability means signals are 50/50 which is another way of saying random.
50K is the next historical support on the time frame we evaluate for swing trades. In order for us to share a new long idea, the price either goes to 50K and provides the proper buy signal, or it develops a clear supportive structure sooner followed by a buy signal. Developing a price structure takes time. One or two candles is not enough.
If the 50K support is taken out instead, then we stand aside as far as swing trades go and wait for the market to stabilize. The potential broad Wave 4 consolidation scenario is still a possibility that we cannot ignore.
If you would like to learn more about how our swing trade strategy works, visit.
The correction off the 57K peak was a potential warning that this market may be going into a Wave 4 consolidation. This doesn’t make us bearish but it does call for profit and risk adjustments. To confirm that price is in a broad consolidation (similar to Gold), the 37K support needs to be compromised which is a low probability at this point.
This is why getting married to opinions and being inflexible is ineffective behavior when it comes to short term strategies like swing trades. While Bitcoin may be in a wave 4, that does not mean we ignore buy signals, especially off of higher low supports within a broader bullish trend (see the two bullish pin bars off of the 46K area on my chart).
Here is what to look out for in the coming days: Lack of follow through. This can develop a number of ways. It can be a lower high around the 56K area, it could double top at 57K or go slightly higher and then fail.
Lack of follow through or a failed break out at this location presents very high risk for those thinking this is a good time to buy, especially for swing trades. Those in from much lower prices (like 48,500) have the luxury to let the market prove itself or not since the position is nicely profitable. If anything current prices are a place to reduce risk, not add more.
IF Bitcoin can clear the 57K resistance and close strong, then it is within reason to see a test of the mid to high 60K area over the following week. Our third profit target is within this area.
There is a minor resistance level between 52500 and the 54K area. There has been some hesitation but nothing significant enough to make any adjustments. If price can clear this area over the next day or two, a test of 57K and a potential break out are within reason. This is especially so since a higher high is favored in such an environment.
What if the 54K area holds price back? We would then be looking at a lower high formation (sort of what the stock market looks like right now). This would be a bearish sign and if it is followed by a break of a candle low (either the 48K area or a low of a new candle that is not on the chart at the moment) that would be a new sell signal.
In the case of a sell signal, we might exit early which can result in a break even or small loss trade. Usually we are purposely slow to react because of the amount of noise in these situations.. Along with that, our risk is defined so even if we get caught in a broader pull back, we get stopped out for the amount we were comfortable risking from the onset of the trade.
If the lower high develops, it could be another hint toward Bitcoin being in a broader Wave 4 consolidation which we have been anticipating for some time. For our strategy, confirmation will not come until the 37K support is compromised. If Bitcoin confirms that scenario, we will adjust our expectations for our long and short term strategies. For example, our swing trade strategy would require more conservative profit target expectations.
A broad Wave 4 does not mean Bitcoin goes into a bear market, but it can be a tough market to trade, very similar to Gold which I keep referring to as an example. If you would like to learn more about how our strategies work, visit https://greenbridgeinvesting.com/pricing
NOW you can see why we emphasize taking partial profits, especially at inflection points. Those who followed our suggestions are now in an even more advantageous position when it comes to buying their partial positions back.
In terms of investing or position trade, any pullback within a bullish trend is an opportunity to accumulate some inventory at a better price. The thing is you must have a well-thought-out plan in terms of how much you want to invest and by what time. This is how you come up with a sizing strategy that will control risk in case Bitcoin revisits 37K or even lower. It is a low probability, but it CAN happen.
As far as swing trades go, while the location is attractive, there is no clear buy setup. Along with that, the magnitude of the recent bearish momentum increases the chance that the bears are still in control. Even if a setup develops here, it would be considered low quality based on the criteria of our strategy.
What we need to see is an instance of price stability followed by a setup. This can unfold in the form of a double bottom or failed low. Formations such as these can take some days to develop and requires patience. And there are times when the low-quality setup will pay off, the thing is it worth taking the risk? If the trade only pays off 2 out of 10 times, then it’s now worth the small win. Many traders take trades with only profit in mind, and NOT probability (which will affect performance over the long run).
Impulse waves (aka trend) unfold in two forms: motive waves which continue the trend further and corrective waves which should be self explanatory. When a 5th leg of a motive wave completes, what likely comes next is a corrective wave.
Right now, Bitcoin is in such a situation on a very large scale. Once the current wave completes, the next wave to follow is a broad Wave 4. This is what Gold has been in since the August peak.
How do we know if we are in a Wave 4? Certain support levels have to be taken out. 45K an 43K are minor supports that can signal the beginning of the broader corrective move. IF 34K is taken out, that will be confirmation that a broad Wave 4 is in play and can linger for months.
The initial wave can appear very bearish but keep in mind it will take a lot in order to change the broader bullish trend. How will we adjust? We don’t short Bitcoin so that is not an option. We will be more selective about our entry levels for longs, because there will be many buy attempts. We will also adjust our profit targets to much more conservative expectations because what is characteristic of Wave 4 is lack of follow through.
If you would like to know more about our swing trade strategy and portfolio management ideas, visit us.