BTCUSD update: Inside bar is established just after the 8500 peak. This points to the beginning of a retrace but how far? The most common mistake is to attempt to short this market because of the perceived bearish potential. It is a mistake because the momentum is clearly bullish. Probability favors shallow retraces and supportive levels. This is a time to be patient and wait for longs, not take high risk shorts.
At S.C., we locked in an 11% profit on some inventory that we were accumulating while the "experts" were shouting BTC 3K. We were simply following best practices which say buy weakness and sell strength. We also employ strategies across multiple time frames and don't depend on one like swing trading alone. Like Andrew tells our followers, its about base hits, not the home run mentality.
Many more aggressive and impatient traders figure they will make money on the short side. Especially now that this market has so much room to pull back. This perspective may be appropriate for day trade strategies but any larger time frame and you are asking for trouble. Why work against the momentum when all you have to do is wait for price to offer an opportunity that is packed with potential. Like a retrace to a support.
The 7500 area is the nearest relevant support (.382 of bullish structure). You are looking at 500 point potential on a short vs. about 1000+ points potential on a long if a reversal appears somewhere between 8K and 7500.
Trying to play both sides often leads to confusion, forced trades and unnecessary fees. Not to mention the slippage you must pay when your stop orders don't fill at a fair price. This is typical when caught in a short squeeze.
Patience on the other hand costs nothing, requires very little energy and if you are wrong and the market leaves you behind, your account is still intact. Patience pays off when the market eventually presents that infrequent high probability setup.
In summary, at S.C. we constantly push for best practices. We are still bullish on this market just like we were 3 months ago. We believe in the merit of these technologies and follow probabilities as revealed by our charts, not nonsensical hype that this space is polluted with.
When momentum shifts like it has in BTC, the probabilities of the coming support and resistance levels also change. Instead of fighting the market, we simply wait for it to align with our criteria.
You do not have to be an expert to utilize the skill of patience. You do need to have a decision making process in place, no matter how simple or complex. This process is what leads to the criteria that needs to be matched by the market. No match, no trade. That makes patience much easier than trying to compete with the fear of missing out.
Our plan is to buy the pull back when price presents an attractive level, formation and setup. At the moment we are anticipating the mid 7500s. Any lower and we will be looking for more accumulation opportunities as well.
Yeah Man, thanks as usual. Managing emotions and following a predefined portfolio strategy is not easy but pays off in the long run. Hard lesson learned a good few years back but well worth it.
The markets will tell us who is right and who is wrong. Personally I have sold into this strength and reset my buy order at 7500 so if it fills it fills.
If not well at least there is cash for the next position, thanks for this lesson as it has served me well over the last 6 months and your posts are a constant reminder to keep my head when making decisions.
dralerte
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Well said, however, even though I agree with a 7.5k support (both psychologically and technically), I believe the price will run up before heading back down another $700 from what is now 8.2.
I see further consolidation and a notherly breakout near-term. A dip down to 7.5k from here slows upward momentum substantially, imo.
Bulls will likely continue to defend 8k with great force (as the've evidently done).
That said, 7.8k is the lowest I see this going (but I wouldn't hold my breath just yet).
Elliotician's (for which I am not) will look for a larger wave 5 on the daily.
This gives a target anywhere from 8.7-9k (potentially).
But first, we must retest 8.5k, which I see happening within 24-48hrs.
Thanks again for valuable contribution.
Regards.
p2hku
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@dralerte, I also cannot really see us retracing to 7500 levels. That would break up the market structure too much, a $1000 drop in such a short-term bullish market? I think we are currently correcting the subwave 3 on the 5th wave up, with the final wave target around 8.8k like you said. Correcting to 7800 briefly seems realistic. After that we would have to take the fib retracement from the whole structure. Right now we haven't really reached the swing high, so it's incorrect to take the fib retracement from the whole structure like OP does.
dralerte
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@p2hku, Honestly, the next time we visit 7.5k, I think it will be part of downtrend correction to lower targets. That said, I believe an entry around 8k is safest (7.8 being the low-end). I do a target of 8.7-8.9k before retracing (somewhat), and an eventual test of 9.8-10k by mid August-Sept. However, as you said, a move to 7.5k for me now would be a red flag if it were to dip down that much from where we are currently. We'll see, I guess.