If you have been following we have not posted but one or two trades in a month. This is because in corrective markets swing trading is dangerous. Day trading is a whole other animal and this takes a special skill and nerves of steel. Of course we all have nerves of steel if you into Cryptos regardless. It's not for the weak hearted. So what do I personally look for in a trade? Well I look for nice consolidation with prior bullish momentum. This requires patience! Many are not patient and like a heroin addict looks for his next fix, new traders look for the next fix and will trade anything. This is why 90% of traders lose 90% of their money in the first 90 days of trading.
I have mentioned before TRADING in corrective markets is a recipe for disaster an many have felt the wrath of the market. Market timing is also a recipe for disaster trying to sell the top or buy the bottom, it seldom happens and those they are good at it are part of liars trading club. We all have those friends. I can tell you over 30 years of investing I have maybe hit the bottom or called the top a handful of times, and that has more to do with statistics I throw enough darts I eventually will hit the bullseye. On the other hand many that trade on emotions often find those tops and bottoms! Unfortunately they are buying the top and selling the bottom!
So looking at the charts of BCH' and BTC' now that the fork has happened I note a few comparisons between the two, and I want to explain the difference in why one is tradeable and the other is not! At least in my opinion.
Now BTC' has been on a bullish tear since the beginning of the year, but every bull market corrects at some point. On the lower right chart I have drawn the trend line of the last leg. Finally BTC' has broken through it. Now pullbacks and throwbacks happen 65% of the time and BTC' is no different. It has retested the trend line. However what was once support is now resistance. This is a bearish sign. Also if we look at the RSI on the lower left you note that we are now trading in the bearish zone. Between 25-60. It failed to breach 60 and until it breaches 80 we are bearish.
BCH' is also correcting and we show in the upper right chart the correction trend line which it has now broken and is consolidating nicely as we would hope for. Does this mean it's going up? NO it just means we are finding stability int he price, However, a breakout of the consolidation box is a highly probable trade setup. It's low risk high reward very often. I know I've been quiet for a few days on this and this is the reason why, I want to see what it does after it breaks the trend line. Consolidation often results in a continuation move. Note the RSI is trading between 40-80 which is Bullish.
Ok Goldy! I could easily draw that same upward trend line on BCH' and by your own statement we have broken it so why is this different then BTC'? This is the difference. BCH' had been consolidating around $300 for a month and broke out to the upside. This is normally the beginning of a bull market move. Where BTC' has been on a tear since 2015 and the wave count states we should be topping. So one is moving out of a consolidation and the other has been moving for 2 years now. As much as we want to BELIEVE BTC' will continue onwards to 10k (and it could) from experience markets always correct. I betting on the car with fresh tires!
Here is the irony. The 1.618 extension of BCH is $3945 and the 0.5 correction for BTC' is $3963. The Parity Level! This is how nature and markets work. Now does it happen? Who knows my crystal ball is still in the shop. I will be looking to add a trading position to BCH' on a breakout, and patiently waiting for BTC' to find direction. This is where patience and steel nerves pays off. This is also why it's important to understand Elliott wave and how markets cycle. I AM NOT RECOMMENDING SELLING BTC' FOR THE RECORD!!!