BTC - The Good, The Bad and the Ugly
Since my Educational/Trading update post of yesterday prices have continued to deteriorate.
The Good: My strategy for using spreads has continued to be profitable on the down trend which is decreasing paper losses by adding profits from the trades. It continues to be a reasonable trade in the current environment. Not only have I profited USD in the oscillation of the price on the way down, but I have steadily cost averaged my BTC downward setting up for nice profits in a recovery. For more information on this trade see yesterday's post on BTC.
At of 12:38 UTC, We are forming a small resistance line in the 8600 area on the one hour chart at the moment and may get a little bounce here. Bad as it sounds, there is some support below at 7927 if we can't hold in this area.
There has been a lot of bad news lately (FUD), most of it more of an emotional effect on the market than any actual fundamental impact on prices. So we should be looking with some reason to be expectant of a turnaround in the price to the upside. My long term view is that we are still in a Bull Market and currently in a correction following a very heated run up. A turnaround at any level from 3627 or higher is most likely going to lead to a rapid run back to the previous ATH (All Time High) in the 20,000 area. Should that happen, $40,000 is not far away.
The Bad: BTC broke through the Likely Near Term Trading Range I had drawn out that I noted was a possibility. BTC has gone further down breaking through the lower end at 9583 of my Likely Trading Range drawn in yellow. We are now firmly in the area of the last Fibonacci level which renders the Fibonacci useless on the BTC charts if it is breached by a closed candle. As a result, I'm forced to use previous support levels as a way to attempt forecasts on possible price turning points. We are also well below the 50 period moving average which does not make the picture any brighter.
The Ugly: If the support level at 7927 mentioned above fails to hold, there is little resistance below until the low of this correction at the 5964 level on the chart. If for some reason that fails the picture gets darker and we have only a minor support at 3627 until the 1300 area. I only put this out there as food for thought, not as a prediction.
Summary: I'm holding all of my coins except for the 10% I'm trading. My dollar cost average prior to this latest downturn is in the $10,000 area. I'm using a spread strategy to take the edge off the decline, and to dollar average my BTC cost down so as to increase profits in the recovery that I fully expect to come soon. I do not believe this is a long term bear market, but rather a correction within a bull market. If you want to be proactive, consider dollar cost averaging down either by investing more, or using a spread strategy such as the one I've detailed in the last two posts on BTC. If you have done nothing else at this point you should consider just hanging tight.
Update: I have widened the spread of my sample trade to allow for a broader range of trading both up and down. It decreases my profit per trade (using the same total amount of funds to trade with) but keeps me in the active trading range. My current range for the spread of $12,369 at the top, down to a bottom end of $6231, is allowing for the possibility of a hard bounce up which is a historically valid probability. I have reduced the trade amount per trade in my example real world trade from 0.1 BTC to 0.05 BTC giving me more 2x more orders and price levels within the range. The minimum spread is 1.2 percent between trades and it exponentially expands the spread between the base price (current market price) and the end of the range on either side. I know this may sound complex but look at the previous posts for BTC it will be much clearer.
I am not a registered investment advisor. My updates are to be viewed as information and education.
The Good: My strategy for using spreads has continued to be profitable on the down trend which is decreasing paper losses by adding profits from the trades. It continues to be a reasonable trade in the current environment. Not only have I profited USD in the oscillation of the price on the way down, but I have steadily cost averaged my BTC downward setting up for nice profits in a recovery. For more information on this trade see yesterday's post on BTC.
At of 12:38 UTC, We are forming a small resistance line in the 8600 area on the one hour chart at the moment and may get a little bounce here. Bad as it sounds, there is some support below at 7927 if we can't hold in this area.
There has been a lot of bad news lately (FUD), most of it more of an emotional effect on the market than any actual fundamental impact on prices. So we should be looking with some reason to be expectant of a turnaround in the price to the upside. My long term view is that we are still in a Bull Market and currently in a correction following a very heated run up. A turnaround at any level from 3627 or higher is most likely going to lead to a rapid run back to the previous ATH (All Time High) in the 20,000 area. Should that happen, $40,000 is not far away.
The Bad: BTC broke through the Likely Near Term Trading Range I had drawn out that I noted was a possibility. BTC has gone further down breaking through the lower end at 9583 of my Likely Trading Range drawn in yellow. We are now firmly in the area of the last Fibonacci level which renders the Fibonacci useless on the BTC charts if it is breached by a closed candle. As a result, I'm forced to use previous support levels as a way to attempt forecasts on possible price turning points. We are also well below the 50 period moving average which does not make the picture any brighter.
The Ugly: If the support level at 7927 mentioned above fails to hold, there is little resistance below until the low of this correction at the 5964 level on the chart. If for some reason that fails the picture gets darker and we have only a minor support at 3627 until the 1300 area. I only put this out there as food for thought, not as a prediction.
Summary: I'm holding all of my coins except for the 10% I'm trading. My dollar cost average prior to this latest downturn is in the $10,000 area. I'm using a spread strategy to take the edge off the decline, and to dollar average my BTC cost down so as to increase profits in the recovery that I fully expect to come soon. I do not believe this is a long term bear market, but rather a correction within a bull market. If you want to be proactive, consider dollar cost averaging down either by investing more, or using a spread strategy such as the one I've detailed in the last two posts on BTC. If you have done nothing else at this point you should consider just hanging tight.
Update: I have widened the spread of my sample trade to allow for a broader range of trading both up and down. It decreases my profit per trade (using the same total amount of funds to trade with) but keeps me in the active trading range. My current range for the spread of $12,369 at the top, down to a bottom end of $6231, is allowing for the possibility of a hard bounce up which is a historically valid probability. I have reduced the trade amount per trade in my example real world trade from 0.1 BTC to 0.05 BTC giving me more 2x more orders and price levels within the range. The minimum spread is 1.2 percent between trades and it exponentially expands the spread between the base price (current market price) and the end of the range on either side. I know this may sound complex but look at the previous posts for BTC it will be much clearer.
I am not a registered investment advisor. My updates are to be viewed as information and education.
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