Again: breaking down without a valid reason: this time you can speak of a mini-MSB but if it was a relevant one price shouldn't have consolidated at the highs that long. This makes the breakdown now weak.
Also: price falling down against previous structure without having some breakdown PA at the highs makes the breakdown even weaker (previous structure 'washes' the strength out the breakdown.
If price would fall straight down to the 76k lowest low I think this is a spot buy at the lowest low. No trade as there isn't a valid SL.
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The question now is: do you buy with a larger % of the allocated capital or not?
I think, if price would go straight down, so without creating new structure during the breakdown, larger % is a valid option. But if there would be structure created, 1/3 or 1/2 is better.
Why?
New structure creates resistance for price going back up from the lows.
If price would get above structure, the likelyhood of price going further up is higher so you would want to buy more, and if this new structure is created close to the lowest low you don't miss out much on the new buys. To make this more clear: let's say price would fall straight down without creating structure like it's doing now, the last structure there is would then be the current structure with the top of this structure being 88k. If you would want to wait for more 'validation' of price showing strength, you would then have to wait for price to close above 88k, missing out on 88k-76k= 12k.
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But yeah, a 100% buy is a bit stupid, too gambly. Think 1/2 is better and then wait for some time spend (1D close above level) above level and then buy the other 1/2 with hopefully not much of a price gap.
Because: what if price just breaks straight through the level? I have my reasons for it being unlikely but who am I to say it can't happen? There is a reason I've said I don't buy levels blindly: so far it has never worked out! So maybe even buying 1/3 is better...
Yes: 1/3 max. There's no need to act tough by going all in to prove your conviction.
Also: price falling down against previous structure without having some breakdown PA at the highs makes the breakdown even weaker (previous structure 'washes' the strength out the breakdown.
If price would fall straight down to the 76k lowest low I think this is a spot buy at the lowest low. No trade as there isn't a valid SL.
---------------------
The question now is: do you buy with a larger % of the allocated capital or not?
I think, if price would go straight down, so without creating new structure during the breakdown, larger % is a valid option. But if there would be structure created, 1/3 or 1/2 is better.
Why?
New structure creates resistance for price going back up from the lows.
If price would get above structure, the likelyhood of price going further up is higher so you would want to buy more, and if this new structure is created close to the lowest low you don't miss out much on the new buys. To make this more clear: let's say price would fall straight down without creating structure like it's doing now, the last structure there is would then be the current structure with the top of this structure being 88k. If you would want to wait for more 'validation' of price showing strength, you would then have to wait for price to close above 88k, missing out on 88k-76k= 12k.
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But yeah, a 100% buy is a bit stupid, too gambly. Think 1/2 is better and then wait for some time spend (1D close above level) above level and then buy the other 1/2 with hopefully not much of a price gap.
Because: what if price just breaks straight through the level? I have my reasons for it being unlikely but who am I to say it can't happen? There is a reason I've said I don't buy levels blindly: so far it has never worked out! So maybe even buying 1/3 is better...
Yes: 1/3 max. There's no need to act tough by going all in to prove your conviction.
Trade active
At the time of wirting this still not sure if we get the 1D candle close above the level or not. Bought the 1/3 on the level though in the morning. Might get an SFP of the lowest low for a bullish candle (15min engulfing candle). Have put a limit order on this low for the 1/3 --->1/2. Might delete later if it doesn't look good.
Note
Added here to go from 1/3 to 1/2 because the 1D Candle Close above 11 March level is guaranteed. Now thinking about the other 1/2 + opening a trade. The problem is: I don't know if an SFP of the LTF lowest low is still possible or if price will just start trending up. The possible SFP is important as for a trade I need a SL and current low as a SL is just too risky. Then I'd rather wait for a clear pump above 84k instead (above the structure) and then buy the HL with SL current lowest low. Now price is 79k, then price for the HL will (hopefully) be like 84-83k. Not that much of a difference and way more convincing. Note
Bought some more at $79.100 to go from 5/10 to 7/10. 3/10 + 1R trade left. Without a hit of the highest high I think an SFP of the lowest low is not possible, so I have put the remaining 7/10 on the low after NY open, around $77.200, looks like a fine level for the HL. 1R trade still left as there's no clear SL.Note
No. I'll wait for the 2nd day candle close. Two daily candle closes above the level is the safest you can get I think. Ofcourse there's never a 100% guarantee but let's say I think it's a 90%. I'd rather now wait for these last hours for the candle close than to try to buy the best price of the HL and risk price still closing below the level in the meantime.Note
Setup invalidated with the 1D candle close below level. Will try to sell everything at that last high ~$80378. Will update later on which mistake I've made.Trade closed: target reached
The mistake made is regarding this level as a relevant level for the 1D Theory. One 1D candle close above the level as a reason to go long has only been proven valid when previously price closed above a relevant resistance-level on the 1D. Here that level is the 95k level which price hasn't yet closed above.I thought: every 1D cc above level on a relevant support-level is a buy as price now can't close below the level anymore but looking at the 70k structure this is not the case: 7 July 2024. Though a relevant support-level (relevant after enough horizontality) has always produced some kind of reaction (as it did yesterday by going to 82k).
The correct thought process is:
- Unless you get a LTF setup, a 1D candle close above a relevant support-level in itself doesn't provide a setup, as price can still close below it in the next several days. Though when price doesn't close below it but pushes away from the level, a HL or SFP eq low might be to be expected in the future (6 September 2024), though it is unknown to me if the HL is caused by the fact that price closed above a relevant resistance-level or if it is the not-closing below the relevant support level.
- When price has closed above a relevant resistance-level on the 1D, then I think you can expect and react to a 1D candle close above a relevant-support level (10 October 2024). Either way, you may expect a HL (6 September 2024, 10 October 2024, 23 October 2024, 4 November 2024).
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Other mistake: putting limit orders on a level has never worked out before. I want to say: never put a limit order on any level: support or resistance, but that 48k level is tempting though....
Price closing below the level LTF instead of it being an SFP (that's what you hope for when you put a limit order on a level) just means that there isn't a setup and you are now in a position while there is no setup: stress when price is trading below your entry and when price gets above your entry your thinking process gets scuffed as greed kicks in (why close when I'm in profit? Can if find cope-reasons for why staying in this trade is the better option so I don't have to close the trade and potentially lose out on more gains?). No setup = no reason to stay in the trade.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.