BTCUSD: Strength Continues Toward Bearish Trend Line?

17 feb 2018

BTCUSD update: 10,500 swing trade target was reached yielding an 1800 point profit and you only had to hold since the 10th. Price is now pushing highs and is poised to break above the bearish trend line established in early January. There is nothing to do at these levels except watch.

People are still sending me messages asking me if NOW is a good time to buy. Clearly they have not read my previous two weeks of reports, and/or their impulses are so strong, that they can't contain themselves. As I have written before, this is when the herd mentality kicks in and offers an opportunity for the prepared traders who positioned themselves much earlier to sell to the "obvious" crowd. The risks are shifting into high mode for initiating new trades. Current levels are a place to lock in profit, not buy.

Now this is when greed begins to rear its ugly head. IF you participated in the swing trade which I defined clearly in my reports, selling some at 10,500 means you locked in some profit and reduced your risk. That was the plan, and if you stuck to it, you should acknowledge your ability to avoid the pitfalls of the herd. When locking in profit, I always reiterate that you should not exit your entire position. Maybe now you can see why.

My average price is 10,020 and my plan since the beginning has been to hold for the broader bullish move. The 9887 to 10836 is a minor resistance zone and serves as a swing trade target and since I am not in a swing trade, I plan to hold and only begin to sell some of my position as this market attempts to cross the trend line which is around the 11,400 area. IF I see a selling formation establish itself such as a pin bar, bearish engulfing or other formations that imply oncoming weakness, I will take that as my signal to lock in at least 15% of my position.

As long as the newly established bullish trend line stays intact, this market is more likely to push higher. This does not mean the market can't pull back. IF this market breaks the trend line, it will be signalling a possible retest of the 8171 to 4983 support zone (.618 of entire bullish structure). This scenario would prompt me to add more to my position trade once stability materializes after the retrace. Buying into the current highs presents more risk because if the retrace scenario takes effect, you will have the worst prices and face a lot more pain if this market decides to retest the low (ANYTHING can happen). Taking the most pain is what often pushes people out of positions at the bottom, which is the way of the herd, not the professional speculator.

In summary, benefiting from the kind of bullish move that came from the 6K low requires planning and structure, not reacting. Often the best prices are the least obvious to the crowd and why having a perspective, and a structured evaluation process is key to capitalizing on their impulsive ways. Evaluation is not "predicting" as so many like to call it. It is about estimating loose probabilities which are based on repetitive price patterns and then considering that information in light of broader technical and fundamental factors. That is what yields a perspective and what facilitates positioning before the herd reacts to the obvious. What also makes this type of positioning possible is the acknowledgement of the potential risk, and comparing that to your personal loss threshold. That is how I decide if a position is worth taking. Charts serve as a tool to develop a perspective, and to quantify risk, they cannot determine your own risk tolerance. That part must come from you and your unique situation. Once you have an idea of what is reasonable on both sides of the market, then you can better decide if the situation is worth the risk relative to your own personal capacity.

Questions and comments welcome.