BTCUSD Perspective And Levels: Is This A Good Time To Buy?

11 Nov 2017

BTCUSD Update: Price continues lower as it nears the 6040 support. What makes this area especially notable is that fact that it is the previous range resistance from October (5960 to 6150 highs). This is a likely area for price to retrace into a Wave B counter correction.

Price appears to be falling like a rock and scaring out the weak hands. Now the 7500 price action doesn't look so appealing any more. My guess is that most people who bought into the 7ks not wanting to miss the train, are now jumping off the train. At the moment, 6841 is the .382 resistance of the recent bearish swing. This level will keep adjusting lower until price stops making new lows. As long as price stays below this level, it is likely to trend lower, even after a minor bullish retrace to test this level.

The bullish retrace I am describing would be the Wave B leg of the correction which is counter to bearish momentum at the moment. Wave B is what sucks in many early longs and then fails to make a new high. This Wave is tricky because it is actually possible for it to retest the previous high or go slightly higher before the C Wave asserts itself. The 6040 area and price range just below 6k (high 5900s) is the old resistance of the October consolidation. This is a high probability area for a price bounce and convenient starting point for Wave B. Is this a place for swing trade longs? No, but day trade sure. Again you must be agile and take profits when you can because a bounce to the high 6900s is not unreasonable over a day or two.

Why not a swing trade long? There is no justification of stability on this time frame. When markets are this dramatic, swing trades carry a lot more risk because the more time you are in the trade, the more of a chance things can change and go against you. I would rather initiate a long once I see solid signs of reversal on this time frame, like a double bottom.

If day trading though, the chances of a reversal pattern appearing just above the 6040 area but on a smaller time frame are much greater. All you need is a small bounce of 100 points, and have a nice trade on your hands. That is where the opportunity is in this market, again if you have the time, experience and agility. If you think you are going to hold it to 7900 from here, that is where the problems arise.

I am interested in a long, but not at these levels unless I see a range, or a large time frame reversal. Also keep mind the money that is migrating out of this market is not exactly going into all the alts. It appears BCH is where the order flow spot light is at the moment. That would be a better market to look for longs in upon a retrace. The question is, when this market bounces, will BCH pull back simultaneously? That would offer a swing trade opportunity long since that market has a ton of potential both near term and long term.

In summary, unless you are day trading, this market is not in a position that offers attractive reward/risk for swing trade longs. It is too early to begin buying for a multiday or mulitweek hold in my opinion. For the traders who had the courage and conviction to short and stay short, this is a good area to lock in some profit as well (never hurts to reduce risk). The next resistance is the 6840 area and will likely be an attractive level to short again (to be clear, I do not short these markets). If the next bullish retrace is shallow (stays below 6840) and turns lower, the next leg can take this market into the 5ks. I report what I see and propose scenarios based on the price structure that is present at the moment. Things change extremely fast in these markets, and not getting stuck with an opinion and being flexible to whatever the market throws at you is more valuable than trying to figure out "why" everything is the way it is. It just is. Accept it, trade it or not, adjust and move on. That is the active trading mentality.

Comments and questions welcome.