The Trade of your life!
Hello traders,
After several months I feel the need to share a trading idea with you. Due to other business I was unable to post my ideas for the past few months. But this trade is too big to be ignored.
So Bitcoin just had it's 3rd halving. Price action is giving us very clear evidence. Since the highs of 20k, bitcoin is switching between bull and bear periods. We re making continuously higher lows and lower highs. That's a classic example of a huge consolidation pattern. A bullish symmetrical triangle is forming on a weekly scale (A symmetrical triangle is a chart pattern characterized by two converging trend lines connecting a series of sequential peaks and troughs). It's called ''bullish'' because the prior price move was upwards.
Now let's look at the stastics of a bullish symmetrical (you can find these numbers anywhere online, i got mine from centralcharts.com):
- In 63% of cases, exit from a bullish symmetrical triangle is bullish.
- In 89% of cases, the upward movement continues after exiting the triangle.
- In 81% of cases, the price manages to reach the triangle's price objective in the event of an upward exit.
- In 60% of cases, the price makes a pullback in support on the triangle’s resistance line.
- In 16% of cases, the price makes false breaks in the support/resistance lines (false exits from the bullish symmetrical triangle).
Other notes:
- A bullish symmetrical triangle’s exit most often occurs at about 80% of the pattern.
- Clean and forceful breaks/exits give better performance.
- Performance is best when the bullish symmetrical triangle is formed at the beginning of a bullish trend.
- Avoid opening a position if the break/exit occurs before 3/4 of the triangle.
- Support pullbacks on the triangle’s resistance line are detrimental to performance.
Past results using triangles breakouts in Bitcoin chart:
We can see only two very clear triangle patterns in weekly scale. One ascending before 2016 halving and one descending triangle during 2018 bear market which led to the 3200$ lows. Both worked for the breakout trades. Of course that does not gurantees the success of the current triangle but it offers a nice perspective of how market is reacting after these consolidation patterns. As you can see, after those periods we has some really powerfull impulsive moves.
This is the biggest consolidation in bitcoin's history, it's the biggest pattern we ever saw. Don't get fooled by the volatility in small timeframes. Looking at the bigger picture is more important than short term noise. We are in a huge consolidation phase. Consolidations like this are ending with powerfull moves up or down...and we all know what is the most likely direction of this asset!
The Trade of your life
Well the title might be a bit exaggerated but indeed I believe that this setup is the one of the best you can find out there. If you re able to assess all the risks and only if you re willing to play the ''longterm game'', this might be the trade of your life. I don't want to get into too much technical details here (Entries, stops positions sizing etc). Trading is and should be different of each one of us. Personally I m looking to build a long position before the breakout and add some more during the breakout. Be very aware of fakeouts in the upper or lower trendline. Weekly closes are important to me, not the wicks. Volume might also give a nice confirmation. Last but not least, manage your risk properly. Greed can actually destroy a great trade.
Not financial advice...Trade safe
After several months I feel the need to share a trading idea with you. Due to other business I was unable to post my ideas for the past few months. But this trade is too big to be ignored.
So Bitcoin just had it's 3rd halving. Price action is giving us very clear evidence. Since the highs of 20k, bitcoin is switching between bull and bear periods. We re making continuously higher lows and lower highs. That's a classic example of a huge consolidation pattern. A bullish symmetrical triangle is forming on a weekly scale (A symmetrical triangle is a chart pattern characterized by two converging trend lines connecting a series of sequential peaks and troughs). It's called ''bullish'' because the prior price move was upwards.
Now let's look at the stastics of a bullish symmetrical (you can find these numbers anywhere online, i got mine from centralcharts.com):
- In 63% of cases, exit from a bullish symmetrical triangle is bullish.
- In 89% of cases, the upward movement continues after exiting the triangle.
- In 81% of cases, the price manages to reach the triangle's price objective in the event of an upward exit.
- In 60% of cases, the price makes a pullback in support on the triangle’s resistance line.
- In 16% of cases, the price makes false breaks in the support/resistance lines (false exits from the bullish symmetrical triangle).
Other notes:
- A bullish symmetrical triangle’s exit most often occurs at about 80% of the pattern.
- Clean and forceful breaks/exits give better performance.
- Performance is best when the bullish symmetrical triangle is formed at the beginning of a bullish trend.
- Avoid opening a position if the break/exit occurs before 3/4 of the triangle.
- Support pullbacks on the triangle’s resistance line are detrimental to performance.
Past results using triangles breakouts in Bitcoin chart:
We can see only two very clear triangle patterns in weekly scale. One ascending before 2016 halving and one descending triangle during 2018 bear market which led to the 3200$ lows. Both worked for the breakout trades. Of course that does not gurantees the success of the current triangle but it offers a nice perspective of how market is reacting after these consolidation patterns. As you can see, after those periods we has some really powerfull impulsive moves.
This is the biggest consolidation in bitcoin's history, it's the biggest pattern we ever saw. Don't get fooled by the volatility in small timeframes. Looking at the bigger picture is more important than short term noise. We are in a huge consolidation phase. Consolidations like this are ending with powerfull moves up or down...and we all know what is the most likely direction of this asset!
The Trade of your life
Well the title might be a bit exaggerated but indeed I believe that this setup is the one of the best you can find out there. If you re able to assess all the risks and only if you re willing to play the ''longterm game'', this might be the trade of your life. I don't want to get into too much technical details here (Entries, stops positions sizing etc). Trading is and should be different of each one of us. Personally I m looking to build a long position before the breakout and add some more during the breakout. Be very aware of fakeouts in the upper or lower trendline. Weekly closes are important to me, not the wicks. Volume might also give a nice confirmation. Last but not least, manage your risk properly. Greed can actually destroy a great trade.
Not financial advice...Trade safe
Catatan
Consolidation at this levels is usually more bullish than bearish. I m keeping a close eye to the price action. The possibility of an early breakout is higher than few days ago but don't forget the fakeout scenario.If some big players (like miners) want to dump bitcoin into the market they might need an extra liquidity. This liquidity can be found in the 10-10.5k area where most shorts have their stops placed and a lot of longs will enter the market as well. Obv that's pure speculation but it's always possible.
Catatan
Ascending trendline is broken on the daily. My best guess is that we are not gonna see bitcoin above 10k for the next few months. Consolidation 6-9k is the most likely outcomeCatatan
Volatility hits 3-month low. Big move is coming for sure, the question is the direction of the move. Nobody can know so we as traders have to be prepared for both scenarios. The more we consolidate at current levels, the more bullish I get but my opinion can change very quickly.Catatan
Almost 2 months later and the price hasn't move much. As I said in my last comment, the more bitcoin is consolidating at these leves, the more bullish it get (since the last major move was up from 4k to 10k, I m expecting continuation until the market proves me wrong by breaking below 9k).
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