Bitcoin: Sell Signals Mean Less When Trend Is Bullish?Bitcoin price action is beginning to lean to the negative side, BUT that does NOT qualify as a trend reversal relative to our long only swing trade strategy. The recent minor sell off to the 9K area is nothing more than range bound NOISE. A trend unfolds in a way that makes progress, it does not gyrate within the middle of a 1400 point range for long periods. As we constantly remind our followers, wide consolidations such as this require a TON of patience. In this video I will explain why there is a better chance price tests the 8500 support, AND what we need to see in order to share a new buy signal.
When developing a trade idea or evaluating a potential opportunity, certain factors must be determined first and magnitude is one of great importance. Many traders and investors have no sense of magnitude which leads to misjudging support, resistance and risk. I see it over and over, all of the bears start calling for unreasonable targets like "Bitcoin 3K!" from a sell signal generated on a 1 hour chart. Maybe they just do this for attention and traffic, but all it really does is confuse those who are much less experienced. For this reason, the magnitude of our strategy is clearly daily time frame. All of our levels, targets and stops come from information generated by the patterns and price structures on this chart ONLY. This is what keeps our expectations in line with the REALITY of the MARKET, and we don't even have to use magical oscillators.
This is where the 8500 inflection point comes into play. In terms of magnitude, it is an old resistance level that is now likely to act as a support. It is also near the lower area of the RANGE. This means IF a buy signal appears in this area, it's potential will be high (next resistance around 10K) while the risk is relatively low (7600 MAX). If the low of the most recent inside bar is taken out (9300 area), then a new sell signal will be in play, BUT within the context of a broader bullish trend and located in the middle of a range. These not so obvious factors help us assign much less weight to the signal, which translates into: we do NOTHING but WAIT for our level or the appearance of a new buy signal to evaluate. Many do not realize that often there are times when no action is the best action to take. Reacting to information (especially when others over dramatize price NOISE) leads to RANDOM outcomes. And we all know that "random outcomes" is just another way of saying "gambling". We carefully evaluate opportunities for favorable probabilities, while controlling risk, which puts us in a much better position to achieve consistency. That is all we can ask for.
