All the hype about 100k or 1 million dollar Bitcoin is being overshadowed by the fact it is unlikely to be a straight path. With Bitcoin setting up to break higher, it is likely to attract a lot of Bitcoin band wagoners, you know those that only a month ago were calling for 6k.
Most participants in the market are reactionary. They react to this news, that news, and tend to jump on the bandwagon at precisely the wrong time, then when it does not pan out, jump off at precisely the wrong time.
What successful investors and traders do is have a strategy and a plan to enact. No different than going into business, you must have a plan, but the plan must be adaptive as time plays out. Seldom do plans work out perfectly, but those that survive do not react to markets, they anticipate.
So with Bitcoin making another attempt to break out is this the time to buy? Probably not. Sure it can push to 16k from here, but probabilities favor a pullback at some point especially with such a parabolic move in the shorter term.
Remember markets are made up of various traders trading various time frames. From scalpers to the long term investor, there are levels where each one has targeted to enter or exit a position. When these levels overlap we get a more decisive swing.
A close above 13,400 increases the probabilities of a swing into the mid 14k region. However even if we do push into this area there are many participants that were buying in the low 10k region. Taking some profits is never a bad thing, especially when you are up 40% in a couple months.
So why not take a trade here? Simple, we are swing traders and the first thing we do with any trade is measure our risk. Risk can be measured from the 12,640 level which is slightly below the lowest candle of the current consolidation. With a reasonable target of 14,200 this is about a Reward to Risk of 1:1. Because this is a continuation trade in a major resistance area , the probabilities of being successful are less than 50%, so probabilities favor losing in the long term if we take this type of trade over and over again.
We need to have a R:R of at least 1.5 or preferably above 2.0, of which both of our recent trade signals sent (3. 40 and 3.60 respectfully) were from more favorable positions. So right now we are simply in a waiting pattern looking for a more favorable setup or a higher R:R that makes up for being a more aggressive trade.
What we want to see is either a pullback into the lower 12k area with a bullish reversal, or a pullback off the 14,200 level (back into the current resistance then support zone ) with a bullish signal.
Until then we wait, and though that may be boring, most action is simply impulsive traders that react to swings and news in the market. This is in the short term, so what about the long term and 16k?