We assigned a low probability to this breakout attempt from the start because of previous price action around this location.
We had actually shared a buy signal in the form of a limit order at 11,500 while Bitcoin was flirting with the highs which had never filled. The limit order is now cancelled and we will wait for two potential scenarios:
1. The bearish momentum as a result of the fake out (all the longs who are caught from the top) follows through and takes out the 11K minor support. IF this unfolds, we will be watching for a test of the 10,400 inflection point. That is the ideal location for a new swing trade long in the event a buy setup develops there.
2. Bitcoin finds support around the low 11K area. IF a long setup appears, we will be open to an aggressive swing trade long, but will have to make risk adjustments because of the less than ideal location. We would consider a long here because the broader trend is bullish and long signals have a better chance of performing off of support levels (even if they are minor).
We will WAIT until one of those scenarios develops. These are within the rules of our swing trade strategy and taking a trade of any other reason would be trying to force it. Patience pays.
This article was written by Marc Principato CMT, Executive Director at Greenbridgeinvesting.com.