Bitcoin: New Long In Effect, Needs To Close Above 20K Area.

2020年12月13日

So far for the month of December there have been 3 swing trade long set ups. 2 of the 3 are now in play. We sent out the second one on Wednesday which means all of the orders were available 3 days in advance of the 18680 break out (which is where we are long from). Since we had an order in place, we did not call the third setup from the 18,250 area. It is essentially the same trade.

This is the difference between traders who react to information and traders who have a plan and let the MARKET do the work. Judging price action without operating under a defined set of rules is no different than playing a slot machine. The rules serve one very important purpose: to remove our opinions, thoughts and feelings from the equation. There are many behavioral biases that do not mix well with the randomness of a market.

From here our objective is simple: reduce risk. There are 3 profit targets in place between the 18680 entry and the 24K resistance area. All we can do now is watch the market work.

What can go wrong? Good question!

The 20K to 20,200 area is still a major resistance. If price cannot clear it decisively. it can fake out again and lead to a broader retrace since many new "reactive" longs will have been lured in and will all be in a hurry to get out at the same time. If we see this scenario begin to unfold we are prepared to adjust by locking in a portion of our position sooner.

Strong markets make higher highs, and if Bitcoin strength is going to continue, then it is within reason to anticipate a push into the low to mid 20Ks over the coming week. That is by no means a guarantee, just an expectation UNLESS an adverse change appears such as a clearly defined sell signal.

If you missed it, the best thing to do now is WAIT. Buying into the 20K psychological resistance carries a LOT more risk now, relative to where it can fake out. As you can see the recent support is around the mid 17Ks (lower blue rectangle on chart) which means if you buy it now, you are looking at 2 to 3K points of risk. You have to risk that in hopes of making AT LEAST that amount to justify your risk. What if Bitcoin fakes out? Chasing into such a high risk area makes you a weak hand, and likely to react emotionally to price noise.

This is a game of risk management, nothing else. A bi product of good risk management is positive returns over time. We stepped aside on all 5 buy signals in November and had to wait until YESTERDAY for our first entry since. That is the nature of a swing trade strategy.

Thank for you checking out my analysis, I hope you found it helpful.