LINKed To The Herd Mentality?
While Bitcoin and the well known alts continue to cure most trader's insomnia, Chain Link has taken the spot light. Once this alt broke out from it's previous resistance of around 5, it has been vertical. If you are new to trading, I would like to welcome you to another fine episode of the HERD mentality in action. Can this thing go to 10 over the next week? In this video I am going to provide technical levels to consider that are proportional to recent price history.
Fundamentals drive attention, that's about it. People want to hear a good story, one that is full of hope, promise and drama. The next Bitcoin! Or some other attention grabbing hype. Stories are part of human nature and are rooted in a form of logic, or cause and effect. What you may not yet realize is that timing markets has very little to do with "cause and effect" and everything to do with behavior.
Our strategy has only one objective and that is to capture short term gains that are a result of price momentum. In order to do this consistently, criteria has to be met otherwise it is outright gambling. Before we even think about assuming risk, we need to answer two questions: if we bought now, what is the probability that this momentum will continue enough to produce a positive outcome, and second, what is the reward/risk? For Chainlink, the 6.80 level is a price projection based on recent structure (emotions express themselves in patterns which can be measured). This means the probability of a retrace is greater than momentum continuing higher. Buying now is a low probability behavior which will not produce consistent returns in the long run. What about the reward/risk? At this point, the risk can be measured from the support around 5, which means you are risking about 2 to reasonably make 3, BUT since PROBABILITY does not favor the move, then WHY take any risk to begin with? The ideal situation within the rules of our strategy would be for price to retrace to the 4.80 area and present a setup. THAT is when probability AND reward/risk make a lot more sense. Will it retrace? We don't know, it is all a matter of being prepared IF such an opportunity presents itself. Consistent performance comes from following EFFECTIVE behaviors and good habits, NOT from reacting to or chasing action.
Fundamentals drive attention, that's about it. People want to hear a good story, one that is full of hope, promise and drama. The next Bitcoin! Or some other attention grabbing hype. Stories are part of human nature and are rooted in a form of logic, or cause and effect. What you may not yet realize is that timing markets has very little to do with "cause and effect" and everything to do with behavior.
Our strategy has only one objective and that is to capture short term gains that are a result of price momentum. In order to do this consistently, criteria has to be met otherwise it is outright gambling. Before we even think about assuming risk, we need to answer two questions: if we bought now, what is the probability that this momentum will continue enough to produce a positive outcome, and second, what is the reward/risk? For Chainlink, the 6.80 level is a price projection based on recent structure (emotions express themselves in patterns which can be measured). This means the probability of a retrace is greater than momentum continuing higher. Buying now is a low probability behavior which will not produce consistent returns in the long run. What about the reward/risk? At this point, the risk can be measured from the support around 5, which means you are risking about 2 to reasonably make 3, BUT since PROBABILITY does not favor the move, then WHY take any risk to begin with? The ideal situation within the rules of our strategy would be for price to retrace to the 4.80 area and present a setup. THAT is when probability AND reward/risk make a lot more sense. Will it retrace? We don't know, it is all a matter of being prepared IF such an opportunity presents itself. Consistent performance comes from following EFFECTIVE behaviors and good habits, NOT from reacting to or chasing action.
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