Bitcoin: 14K High Not A Good Place To Buy? But Why?

1 בנוב׳ 2020

!4K area tested, but not enough momentum to push through. We continue to WAIT for our next long setup rather than react at these levels for two reasons: 1) the location is highly vulnerable to selling, 2) reward/risk is unattractive.

In my webinar yesterday I talked about the mechanics behind the setups that we utilize for our LONG only swing trade strategy. No matter how price behaves at these levels, no matter how compelling it looks on a 30 minute chart, OUR rules tell us NOT to buy into this. The 13K to 14K area is a place to lock in profits, as we have with 13,250 being our most recent.

The June 2019 high of 13,880 has been compromised which is a bullish sign, BUT price is still unable to close decisively above 14K. That implies temporary weakness. Taking anything longer than a day trade at these levels is high risk relative to the short term potential profit. You can't win over time by risking 600 to 1000 points only to make 3 or 400. So high risk location + low probability of follow through = no trade.

In order for us to even consider a new long, we need to see a test of the low 12K area. The line that I drew on the chart pointing to this area is NOT a prediction, rather it is the ideal scenario that Bitcoin may OR may NOT provide. The previous resistance at 11,600 to 12,300 is now an anticipated support area which offers a much higher probability of a bullish reversal and acceptable reward/risk. So all we can do is WAIT. We don't chase oscillators, we don't chase news, and we don't need complicated geometry on our chart.

High probability opportunities are often not obvious, and also infrequent. Over the month of October (that's 31 days) we only had 2 trades in Bitcoin. ONLY 2 and I shared details about both of them in previous articles here. That is a testament to our level of patience and proficiency. If you are having a tough time, the most likely issue is lack of process or following specific rules that have been developed around your goals.