Bitcoin Buy Signal From 11,415 But It's Aggressive.
Updated
Bitcoin: higher low now established off of the 11,200 area followed by another buy signal to go long (upon break of 11,415). We are still long 2/3's of the position from the buy signal that I shared two weeks ago from 10,675 (see TV article) and continue to wait for the second profit target upon a test of the low 12Ks.
Why is the current buy signal very aggressive?
One of the ways that we gauge probability is by evaluating the price location (oscillators will NOT help you with this). The 11,600 to 12,300 resistance zone has been in play for a very long time. The 12K level in particular is a psychological resistance that is likely to see some selling activity.
Taking a new buy signal so close to such a level means the chance of getting stopped out is greater, since the relative stop loss would be placed somewhere around the 11,200 area. The reward/risk still makes sense since the first target for such a trade would be near 12K, but you have to be willing to face the potential lack of follow through.
Why would we continue to hold our original position in such a risky area?
The current location carries more risk for NEW longs, not positions from lower prices. We have locked in 1/3 profit at 11,375 which makes us a strong hand. If price retraces to 11K from here (which is possible) we simply hold because our position is still profitable. Being in from a better price allows us to participate in the BROADER trend and capitalize on LARGER moves over time, NOT chase, or get shaken out, or flip our position as a result of reacting to irrelevant price noise.
The broader trend continues to favor a higher high which can take price into the mid 12K's on the next leg, (see recent blue dotted line on chart).
The question is: does this type of trade fit your risk profile? Often it is more appropriate for traders who are nimble and decisive enough to mitigate risk quickly if the lack of follow through unfolds.
An effective way to enter is to use a limit order below the market at this point, OR just wait for the next higher probability buy signal (which can appear upon a test of the 11K support).
Thank you for checking out my article and I hope you found it insightful.
Why is the current buy signal very aggressive?
One of the ways that we gauge probability is by evaluating the price location (oscillators will NOT help you with this). The 11,600 to 12,300 resistance zone has been in play for a very long time. The 12K level in particular is a psychological resistance that is likely to see some selling activity.
Taking a new buy signal so close to such a level means the chance of getting stopped out is greater, since the relative stop loss would be placed somewhere around the 11,200 area. The reward/risk still makes sense since the first target for such a trade would be near 12K, but you have to be willing to face the potential lack of follow through.
Why would we continue to hold our original position in such a risky area?
The current location carries more risk for NEW longs, not positions from lower prices. We have locked in 1/3 profit at 11,375 which makes us a strong hand. If price retraces to 11K from here (which is possible) we simply hold because our position is still profitable. Being in from a better price allows us to participate in the BROADER trend and capitalize on LARGER moves over time, NOT chase, or get shaken out, or flip our position as a result of reacting to irrelevant price noise.
The broader trend continues to favor a higher high which can take price into the mid 12K's on the next leg, (see recent blue dotted line on chart).
The question is: does this type of trade fit your risk profile? Often it is more appropriate for traders who are nimble and decisive enough to mitigate risk quickly if the lack of follow through unfolds.
An effective way to enter is to use a limit order below the market at this point, OR just wait for the next higher probability buy signal (which can appear upon a test of the 11K support).
Thank you for checking out my article and I hope you found it insightful.
Comment
This is the chart that I sent privately after I published this article. Depending on which exchange you use, if you had placed the buy limit at 11,415 it would have filled (I received confirmation from traders who took this trade).
As you can see the risk has been reduced by 2/3s while it has one more profit target.
Our previous trade, (which I shared the entry order on here along with 1 profit target) from 10,675 has reached all 3 targets. The third being 12,875 for an average profit of over 1K points.
People are asking me if now is a good time to buy. We have profit targets around the current levels, which means no, it is not a good time to buy.
The next best thing to do now is WAIT for a retrace to a support level where 3 things must take place: 1) attractive location (11,500 to 12K area) 2) Long setup must appear (particular patterns we look for). 3) Confirmation which means price must prove itself.
Our trade ideas begin with a plan in ADVANCE and can take weeks to develop. We don't chase news, hype or push polluted charts.
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