Bitcoin: New Sell Signal? Consider These Inflection Points.

2020년 3월 22일

#Bitcoin has reacted off of the 6425 resistance level that I have been highlighting recently. And as a result, is in the process of producing a mixed signal. Broader structure favors a test of recent lows, while short term order flow may be pointing to a not so obvious change. The larger structure (recent bearish swing from 8K to 4K) should carry more weight, until a new pattern or development comes along to negate that idea. The aim of this article and video is to point out what these changes can look like and how they will shape our SWING TRADE decisions as the price unfolds.

These are the main points of this video:

1. Price has tested the 7150 area, but could not close above 6425. While the push into the low 7Ks is a positive, and may be a sign of a changing price structure (better chance of reversal upon next retrace), it is not enough to provide any kind of conformation that we can rely on. This is the nature of a mixed signal. We are still open to taking swing trade long signals (we recently shared one at 5750), but at 1% risk ONLY.

2. IF price closes below 5640, a new sell signal will be confirmed. We do NOT intend to exit our long upon such a signal, and have compensated for such movement with a wide stop and smaller position size (1% risk). The push to the 7150 area helps to define two particular inflection points where a bullish reversal can materialize and we are willing to give the market a chance to produce one of these scenarios.

3. The 4800 area is the first location where a higher low can develop. IF a pin bar or inside bar appears in this area on THIS time frame, we will be prompted to share a new SWING trade long idea. Since we are long, we will not add to our swing trade (strict risk control). The second area is the one that tricks most bears and that is the failed low around the 3500 area. This is where price appears to be making a lower low, followed by a sharp reversal candle. A pin bar or outside bar would be compelling and within the scope of our expectations. This is basically a variation of the double bottom and a common pattern that we specifically look for in terms of our swing trade strategy.

Again these are a summary of high probability inflection points that we are anticipating, these are not predictions or absolute opinions of any kind. Bitcoin, like the stock market is motivated by the same irrational behaviors: greed and fear which play out in particular and repetitive patterns of order flow. As retail traders who are not privy to non public material information, order flow is the next best thing we can possibly get, not news or other forms of infotainment. Capitalizing on it requires overcoming the obstacles put in the way by our own human nature. If you want to win in the long run, stop reacting to the obvious.