Bitcoin: Mixed Price Action, Waiting It Out.

3 may 2020

Bitcoin pushing into the 9Ks after printing a bearish pin bar upon Friday's close. Nothing showcases strength more than a market that lingers around a resistance area. With the Bitcoin reward halving on the horizon, all of the coming hype will likely reflect positive sentiment and limit the potential of any bearish signals along the way. This is all good for those who managed to get long when the opportunity was not so obvious (5750 and 7025 were the levels of our swing trade ideas), because NOW is NOT a time to buy. In this video I further explain the concept of wholesale vs. retail prices and why sometimes in order to win, WAITING is the best choice.

Our next profit target is at 9750, and then we have one much higher than that. Even though a new buy signal has been activated (break of the inside bar high), we have NO intention of buying more at these levels. Why? The REWARD/RISK is NOT attractive. Consistent performance does not come from chasing profits, it comes from evaluating and managing risk. If the potential of the trade idea presents a relatively greater risk, why would we take such a trade? Even if price goes straight to 10k from here, the nearest reasonable location to place a stop (based on our LONG only swing trade strategy) is around the 7300 key support level. Over time you cannot make money by risking around 1700 points, only to make around 1000 if you happen to be right.

Some will argue: why risk 1700 points when you can pull up a 4 hour chart, and find a much closer support level? The levels we calculate are all of the same magnitude. Measuring risk on a 4 hour chart, while projecting the reward on a larger time frame only increases the chances of being stopped out. Both risk and reward potential must be measured in the same magnitude in order to get proportional and reasonable stops and targets. With that being said, IF Bitcoin is going to break out to levels beyond 10K, there will more than likely be continuation patterns or small retrace structures that we can calculate NEW risk parameters from, and that's when it can make sense to buy at higher levels. So until Bitcoin retraces to an attractive support (7300) or presents a continuation pattern, we do nothing but let our winners run to our predetermined targets. The market chooses the outcome, all we do is adjust and watch.