We shared two swing trades over the previous 3 week period and both reached all three profit targets. Our targets were strategically placed between 11,600 and 13,250 because of the historical resistance. Now that 11,600 to 12,300 has been cleared, we can anticipate a high probability of support.
Old resistance becomes new support and vice versa. I am not going to get into the psychological aspects of this phenomenon, but in this case it meets the first criteria that we look for when it comes to a trade idea and that is: attractive location.
The blue lines on my chart point to the ideal area where probability favors new buying activity and that is the low 12Ks. Will Bitcoin offer such an opportunity? That is up to Bitcoin. All we can do now is WAIT and see if it develops over the next week.
Can Bitcoin find support sooner? Yes, anything is possible, but it must provide a price structure that qualifies and allows for a way to define risk. Otherwise no trade.
This philosophy keeps us out of a lot of fake-outs, false signals, and other noise that many get confused by, especially when watching smaller time frames. This is why we only had 2 trades over a 3 week period and the next trade may take a week or so to develop. Waiting is the skill that most traders and investors struggle with.
This article was written by Marc Principato CMT, Executive Director at Greenbridgeinvesting.com.