Bitcoin: Consolidation To Go Higher But When To Buy?

24 Mei 2020

Bitcoin has found some support in the lower 9Ks, but is NOT yet providing a clear buying opportunity in terms of price structure and setup. In previous analysis videos I have been anticipating a range bound price formation and that appears to be what Bitcoin is producing at the moment. So how are we going trade this in terms of our LONG only swing trade strategy? In this video I will explain further.

Rules produce results, so we trade our rules and nothing else. The bullish inside bar that has developed around the lower 9Ks is typically a buy signal, but that ALONE is NOT enough to justify risk based on OUR RULES. Accounting for CONTEXT is a big factor that helps us better gauge the QUALITY of the buy signal since not all buy signals are equal. For our more aggressive followers we even shared a swing trade idea upon the break of the 9325 level which never triggered (our filtering method helps to further minimize taking low quality setups). So what is the key piece of information that puts this price action in the "step aside" category in terms of our rules? There are 2 factors: the larger magnitude bearish movement off the 10K resistance zone, and that price is now gyrating in the MIDDLE of a consolidation.

Even though price is not making progress on the bear side, the current momentum still leans that way. Which means the RANGE LOWS will be the most attractive location in terms of probability and risk/reward for new swing trade long setups. This keeps the 8500 and 7695 levels in focus in terms of inflection points to WAIT for. Does this mean Bitcoin will trade at these levels? That is a question that only Bitcoin can answer, all we can do is prepare for the possibility. ANYTHING can happen, and the element of randomness is high which means we will adjust to a higher price IF the structure makes sense. A failed low or minor double bottom around the high 8Ks would meet this criteria.

Typically consolidation patterns like the one developing now (similar to Gold) are trend continuation patterns and the broader trend is still bullish based on RECENT structure. The toughest area to take a trade in these situations is in the middle of the range. Bears are going to insist there is a lower high at 9300, but within a consolidation, this carries no weight. The concept that keeps us out of trouble is this: if the market moves higher without us, we don't lose ANYTHING, all we have to do is wait for the next setup and follow the RULES.