Bitcoin 4hr analysis 12-21-2020
Good morning again ladies and gentlemen and welcome back to the Bitcoin show... Today I have the 4hr time frame pulled up after a bearish start to a Monday A.M. No sweat though right everyone? I mean we eclipsed the ATH this weekend and RSI is extremely overbought on just about every time frame ever created. A retrace is long overdue. I know there are still those people that would see Bitcoin tear up to 100k and drop to 80k and call it a failure. LOL. I guess this market has spoiled the majority of us into thinking 40% gains are a normal occurrence. But let me tell you that a 40% gain is extremely rare. Even with BTC. The entire 3 years Ive been in BTC I think 2-3 times we had gains of 40% over the course of a few months. But over 3 years if you could take advantage of these surges you could really clean up. With that being said lets take a look at the charts today and see what we can see.
The bears must have set an early alarm as the dump occurred this morning. We lost some ground but that was to be expected IMO. Why? Because we moved up this weekend creating a small gap below the candles. The gap was hardly noticeable. Between 23200 - 23400 approximately. That was almost immediately filled this morning. I assume most smaller gaps will fill on the Monday following their formation on the CME. I often trade them. I left this one alone but I mentioned it yesterday and if you would have listened you may have parked that BTC in USDT to take advantage of the gap filling. These gaps are pretty self explanatory and work as advertised most of the time. With that being said nothing is 100% and there are numerous gaps that havent filled yet so that should tell you that they do not always fill like one would hope. I always look for gaps Monday A.M. as they tend to fill quickly and you can make a quick profitable trade to start the week off. What is not to like?
Okay I drew a trend line on the chart and it was resistance earlier in the weekend and once we broke that resistance we made a new ATH. 24300 approximately. Nicely done Bitcoin! I was on vacation all weekend and it was nice to come home and see that Bitcoin was still soaring. Even with a 6% drop this morning we are still up nearly 17% over the last 7 days. There are always two sides to each piece of toast. I say keeping our heads above 20k is an accomplishment all in itself. 2 weeks ago 20k wasnt even on most of our radars. I knew if we were this close to 20k the halving along with institutional buyers coupled with breaking the 2.5 year resistance on the chart and finally the drop to 3800 in March started the surge of volume that took us to 24k.
When you see a dip you take advantage of that. Its what traders do. But while smaller dips still have opportunities attached to them the bigger dips like the one I just mentioned in March are the ones you need to take advantage of. I did it in 2018 when we dumped to 3200 and this year when we dumped to 3800. Loaded up each time. It paid off each time. The first time I think that buy around 3600 (in 2018) saw me gain over 3-4X my investment. Great return. This year it was more of this. I bought some around 4k and it is still pumping. I have taken the principle investment out as of Thursday. I think I sold close to 22500 but I may be a bit off. Still I was well into profit at that point and now Im playing with the houses money. That is how you do it. Take your money back. Nobody can say you lost any of your hard earned money if you remove the principle. Its just the way I trade. If you want to leave the principle investment in the mix that is your prerogative. Just make sure you set a stop loss. Always!
The 4hr shows us that there is a lot of support holding us up currently. I drew a circle around the area. The 4hr 50 MA (orange line) (21600) along with the top border of the 4hr cloud (close to 21600 as well) and finally the trend line that is probably the weakest of the 3 IMO. It is holding the candles now and the trend line is around 22100. Loads of support in the same general area gives markets confidence to enter a long position. I know I feel more confident when we are above my trading set up. RSI worries me. But it looks decent on the smaller time frames as they tend to move faster than the daily or weekly. The weekly RSI is concerning as we have 2 examples before this pump that show when we get to these levels of RSI we drop 50% (weekly RSI) That is not a guarantee that it will occur again. But you better believe I am preparing for the worst while hoping for the best. That is all we can do at this point. Bitcoin is still carving up new support and resistance as I type which means TA isnt the easiest thing to do at this time. Just not a lot of data above 20k (as you can imagine) Im not clairvoyant. I use logic to try and make good trades. It doesnt always work as I wish but my risk system ensures that my losses are low and my gains are maxed out. My strategy works for me.
Speaking of strategies if you are going to trade you need a strategy. A plan. An entry plan for all trades and an exit plan. Mine is probably similar to a lot of other traders. Walk the stop loss up when the bulls are in charge. I used to move that stop loss down to stay in the trade longer and avoid being stopped out but now I just try and set it better. If I do get stopped out though Im out of the trade. I wait for another time for reentry and that is that. I never move the SL (*stoploss) down anymore as I got burned quite a bit thinking it would pay off. Eventually giving into the bears and just selling at a loss. Now I set the stop loss and forget it. If we do move up I walk it to below the next solid support. This locks in profit. Simple yet effective. Maximize your gains while minimizing your losses. I will tell you right now I lose 50% of my trades approximately. But those losses are always low thanks to my stop loss. I dont trade leverage so I would say my average loss on a failing trade is less than 5% while the wins are on average 12-15%. That is average. There are extremes on both ends. You forget to set a stop loss one day and you will never forget.
My thought process is trading is like Baseball. You get up to the plate and you want to hit a homerun. But even Barry Bonds got struck out from time to time. The best traders will also "Strike out" but this is where risk management comes into the mix. You strike out. BFD. You dust yourself off and get ready for your next time at the plate where you will get another chance to hit that homerun. With enough discipline and a decent strategy you can really clean up.
We do have more gaps below us. No gaps at all above us but that is because this is our first real weekend at these levels. Bitcoin has been relentless and this December has been a reward to us all. All of us who stuck it out during the bear markets of the last 3 years. Its been a crazy time for sure. Many naysayers and doubters laughed in my face when BTC dropped below 5k. But who is laughing now? All the way to the bank baby. This week may see a new ATH but lets not get ahead of ourselves. I would prepare for the worst. Set a stop loss and stick with it. If we surpass the ATH of 24300 that would be great but nothing is guaranteed. At this point a possible stimulus is in the works for the US once again. Not a huge amount but this may stop people from exiting positions they have in BTC. I know the last thing I want to do is sell in a bull market. But people will do so for tax purposes and also maybe for Xmas presents etc.
This has been a rough year considering so its a surprise to me that people havent been taking BTC out into USD to pay for those Xmas presents. Its really refreshing. Bitcoin has become everything the banks and corporations claimed it wouldnt. Bitcoin is legit. People that called it Tulips 3 years ago are now kicking themselves for not buying that day instead of insulting those with the foresight to buy. People claim "Its too late! I missed the boat with BTC." Well let me tell you I bought some less than 10 months ago and that went up 6x. If that isnt enough to interest you perhaps you should stick with lottery tickets... (Scratch offs) I am going to cut myself off here. I would love to see 25k this week but only time will tell. 2020 has been a terrible year for mostly everything except Bitcoin and other investments. 2021 is a horse of a different color though so we should enter the new year with confidence but also logic. Nothing goes up forever. I hope you all have a great Monday. Please make good smart choices my friends. And always remember... WTFDIK????
TLDR: Bitcoin dropped a bit. Filled in that weekend gap. Support is holding though and it looks like we are gaining ground at this time. Plenty of support below us. Set a stop loss folks. 2020 isnt over yet
The bears must have set an early alarm as the dump occurred this morning. We lost some ground but that was to be expected IMO. Why? Because we moved up this weekend creating a small gap below the candles. The gap was hardly noticeable. Between 23200 - 23400 approximately. That was almost immediately filled this morning. I assume most smaller gaps will fill on the Monday following their formation on the CME. I often trade them. I left this one alone but I mentioned it yesterday and if you would have listened you may have parked that BTC in USDT to take advantage of the gap filling. These gaps are pretty self explanatory and work as advertised most of the time. With that being said nothing is 100% and there are numerous gaps that havent filled yet so that should tell you that they do not always fill like one would hope. I always look for gaps Monday A.M. as they tend to fill quickly and you can make a quick profitable trade to start the week off. What is not to like?
Okay I drew a trend line on the chart and it was resistance earlier in the weekend and once we broke that resistance we made a new ATH. 24300 approximately. Nicely done Bitcoin! I was on vacation all weekend and it was nice to come home and see that Bitcoin was still soaring. Even with a 6% drop this morning we are still up nearly 17% over the last 7 days. There are always two sides to each piece of toast. I say keeping our heads above 20k is an accomplishment all in itself. 2 weeks ago 20k wasnt even on most of our radars. I knew if we were this close to 20k the halving along with institutional buyers coupled with breaking the 2.5 year resistance on the chart and finally the drop to 3800 in March started the surge of volume that took us to 24k.
When you see a dip you take advantage of that. Its what traders do. But while smaller dips still have opportunities attached to them the bigger dips like the one I just mentioned in March are the ones you need to take advantage of. I did it in 2018 when we dumped to 3200 and this year when we dumped to 3800. Loaded up each time. It paid off each time. The first time I think that buy around 3600 (in 2018) saw me gain over 3-4X my investment. Great return. This year it was more of this. I bought some around 4k and it is still pumping. I have taken the principle investment out as of Thursday. I think I sold close to 22500 but I may be a bit off. Still I was well into profit at that point and now Im playing with the houses money. That is how you do it. Take your money back. Nobody can say you lost any of your hard earned money if you remove the principle. Its just the way I trade. If you want to leave the principle investment in the mix that is your prerogative. Just make sure you set a stop loss. Always!
The 4hr shows us that there is a lot of support holding us up currently. I drew a circle around the area. The 4hr 50 MA (orange line) (21600) along with the top border of the 4hr cloud (close to 21600 as well) and finally the trend line that is probably the weakest of the 3 IMO. It is holding the candles now and the trend line is around 22100. Loads of support in the same general area gives markets confidence to enter a long position. I know I feel more confident when we are above my trading set up. RSI worries me. But it looks decent on the smaller time frames as they tend to move faster than the daily or weekly. The weekly RSI is concerning as we have 2 examples before this pump that show when we get to these levels of RSI we drop 50% (weekly RSI) That is not a guarantee that it will occur again. But you better believe I am preparing for the worst while hoping for the best. That is all we can do at this point. Bitcoin is still carving up new support and resistance as I type which means TA isnt the easiest thing to do at this time. Just not a lot of data above 20k (as you can imagine) Im not clairvoyant. I use logic to try and make good trades. It doesnt always work as I wish but my risk system ensures that my losses are low and my gains are maxed out. My strategy works for me.
Speaking of strategies if you are going to trade you need a strategy. A plan. An entry plan for all trades and an exit plan. Mine is probably similar to a lot of other traders. Walk the stop loss up when the bulls are in charge. I used to move that stop loss down to stay in the trade longer and avoid being stopped out but now I just try and set it better. If I do get stopped out though Im out of the trade. I wait for another time for reentry and that is that. I never move the SL (*stoploss) down anymore as I got burned quite a bit thinking it would pay off. Eventually giving into the bears and just selling at a loss. Now I set the stop loss and forget it. If we do move up I walk it to below the next solid support. This locks in profit. Simple yet effective. Maximize your gains while minimizing your losses. I will tell you right now I lose 50% of my trades approximately. But those losses are always low thanks to my stop loss. I dont trade leverage so I would say my average loss on a failing trade is less than 5% while the wins are on average 12-15%. That is average. There are extremes on both ends. You forget to set a stop loss one day and you will never forget.
My thought process is trading is like Baseball. You get up to the plate and you want to hit a homerun. But even Barry Bonds got struck out from time to time. The best traders will also "Strike out" but this is where risk management comes into the mix. You strike out. BFD. You dust yourself off and get ready for your next time at the plate where you will get another chance to hit that homerun. With enough discipline and a decent strategy you can really clean up.
We do have more gaps below us. No gaps at all above us but that is because this is our first real weekend at these levels. Bitcoin has been relentless and this December has been a reward to us all. All of us who stuck it out during the bear markets of the last 3 years. Its been a crazy time for sure. Many naysayers and doubters laughed in my face when BTC dropped below 5k. But who is laughing now? All the way to the bank baby. This week may see a new ATH but lets not get ahead of ourselves. I would prepare for the worst. Set a stop loss and stick with it. If we surpass the ATH of 24300 that would be great but nothing is guaranteed. At this point a possible stimulus is in the works for the US once again. Not a huge amount but this may stop people from exiting positions they have in BTC. I know the last thing I want to do is sell in a bull market. But people will do so for tax purposes and also maybe for Xmas presents etc.
This has been a rough year considering so its a surprise to me that people havent been taking BTC out into USD to pay for those Xmas presents. Its really refreshing. Bitcoin has become everything the banks and corporations claimed it wouldnt. Bitcoin is legit. People that called it Tulips 3 years ago are now kicking themselves for not buying that day instead of insulting those with the foresight to buy. People claim "Its too late! I missed the boat with BTC." Well let me tell you I bought some less than 10 months ago and that went up 6x. If that isnt enough to interest you perhaps you should stick with lottery tickets... (Scratch offs) I am going to cut myself off here. I would love to see 25k this week but only time will tell. 2020 has been a terrible year for mostly everything except Bitcoin and other investments. 2021 is a horse of a different color though so we should enter the new year with confidence but also logic. Nothing goes up forever. I hope you all have a great Monday. Please make good smart choices my friends. And always remember... WTFDIK????
TLDR: Bitcoin dropped a bit. Filled in that weekend gap. Support is holding though and it looks like we are gaining ground at this time. Plenty of support below us. Set a stop loss folks. 2020 isnt over yet
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