Bitcoin: New Buy Signal And One Simple Rule.

12 Apr 2020

Bitcoin: Noise in the markets comes in many forms: price noise, inflexible opinions, hype, etc. It is one thing to consume it for intellectual entertainment, but taking action or making decisions on such information is NOT helpful at all for your trading account. There are many moving parts when it comes to evaluating a market, no matter what mix of fundamental and technical information you choose. The key is to have a set of rules to filter out the adverse effects and bias of human nature. In this video I explain why we believe price structure FAVORS longs, and where to anticipate bullish order flow IF selling activity increases from here. I will also touch on one simple rule that we employ in our long only swing trade strategy.

Key Point:

Low 7K resistance area has asserted itself, BUT price is more likely to push higher in its next bullish retrace. Why? The 6425 level was a key resistance that once taken out, offered some kind of PROOF that the balance of order flow leans more toward the bullish side. The recent indecisive price action is consistent with this idea so far. Sell offs are not "stop and go", fear is a powerful motivator and buyers do not appear to be getting absorbed around the current price level.

This will NOT be obvious on any oscillator, or any other random art on a chart. It is a concept that is based on price structure, proportions and forecasting methods that project forward, NOT focus on looking back. Does this mean price can't pull back to 6K? No, but until Bitcoin provides evidence for that scenario to be likely, it is an event that we assign a low probability.

We can do all the analysis in the world and it will not change the fact that markets are highly random. That means things look one way one minute, and then they change. Rules are what allow us to qualify opportunities and filter NOISE. One of our simplest rules: using predetermined prices to enter or exit a trade. This helps to minimize the effects of emotional decision making and filters out many would be fake outs that often lead to a stop out. Having preserved that capital allows us to continue to participate in the next quality setup. Evaluating and managing risk should not be confused with evaluating a market.