Bitcoin: The Beginning Of Wave 5?

31 בינו׳ 2021

Bitcoin has established support off the 30K AREA and has confirmed an initial leg higher which tested the 38Ks. While the run appears to lack follow through, the perspective NOT to lose sight of is that fact that the 27.5K trend support has not been compromised.

Consolidations are littered with false breakouts, and random price noise. Those who are stuck on smaller time frames will especially find these environments confusing. This price action is perfectly normal for a range bound or Wave 4 consolidation that continues to unfold within a BROADER BULLISH trend.

What this means is at some point soon, Wave 5 is likely to follow (blue dotted line on chart). Looking for shorts in such a scenario continues to be a high risk, low potential strategy particularly on the larger time horizons (swing trades). For this reason we have taken the recent SWING TRADE long signal off of the 33,650 area which is now in the red. There is NO reason to over react here and second guess the market just because it goes a little red. A stop was put in place at the time of the trade and the risk is clearly defined. It is usually best to let the market determine the outcome of the trade and not interfere with it.

How We Define Trend:

There seems to be a lot of confusion about what a trend is. For our strategy, it begins with the daily time frame because that is where we are evaluating risk from. Based on our specific rules, as long as price fluctuates above 27.5K, our outlook will continue to be BULLISH, even within this smaller range bound structure. 27.5K to 30K is a broader higher low area, and in the context of a bullish trend, higher lows often lead to higher highs.

This means: sell signals carry less weight, buy signals carry more weight and potential targets can be adjusted higher (into higher high regions). We use market information to adjust expectations, not opinions or news. Like I remind our followers regularly, there is NO room for conventional logic in a highly random environment such as a financial market. Even traders with some experience get this wrong because they still haven't unplugged themselves from the tendencies of human nature.

While many attempt to "predict" where Bitcoin will go, we assign probabilities and ADJUST as the market provides NEW information through price.

Thank you for considering my perspective, I hope you found it helpful.