Bitcoin: Not Worth It At These Levels.

4 באפר׳ 2021

Bitcoin refuses to sell off even though price has rejected the 58K to 62K resistance zone. While the current candle has yet to close and prove its strength, the fact that there is no bearish follow through increases the chance of a successful break out and trend continuation. The next inflection point is in the 66K area.

The reversal zone boundary (large blue rectangle) is a tough location for both new longs and potential shorts and it all revolves around the risk. For the longs, IF price fails again, the broader support is still around 53K to 50K. This means if you are buying in the 58K area, you are risking 5K to 8K points in hopes of making at least that upon the break out. Since there is still a high potential for price rejection in this zone, it is hard to justify such a trade on a swing trade time frame.

On the short side (which is counter trend) you run the risk of getting caught in the break out which can be very sharp and dramatic if it can follow through. We employ a LONG only swing trade strategy so getting short is not even a consideration for us anyway. Why don't we short Bitcoin? We don't use leverage tor these markets.

The solution to this high risk problem is simple: Either you consider a smaller time frame strategy like a day trade or just stay out and avoid risk completely. The advantage to a day trade is the greater risk control but you must be very nimble no matter what side you take. Nimble means staying on top of it and if the trade starts to go the wrong way, you are quick to accept the small loss.

We don't day trade Bitcoin and would not recommend that style to newer traders. It is the hardest way to play this game because you have to be quick to recognize subtle but important clues and be decisive enough to act on them all while not over trading or churning.

The unpopular but more effective thing to do in these situations is stay flat. High quality opportunities are infrequent and require a lot of waiting. Conventional wisdom, "popular" views, and obvious choices are your enemies in this game. They are the stimulants that the herd reacts to, especially when you amplify that information with personal baggage like fear, insecurity and ego. When it comes to timing markets, usually the best information is derived by what the market is NOT doing, or by information you can't see.

So in light of our rules based strategy, there is NOTHING for us to do here but wait. IF price can test the 53K area, we will be open to a new swing trade long upon a confirmation.

Thank you for considering my analysis and perspective. I hope you find it helpful.