Bitcoin may be in the process of establishing a higher low formation. IF the current candle can close green, and then take out its high during the next candle, a new buy signal will be in effect based on our LONG only swing trade strategy. How does this compare to the recent price structure?
Buy signals based on candle formations are only one part of the decision making process that we use when it comes to assuming risk for a new swing trade idea. Just because a signal appears, does not mean probability or the environment is particularly favorable. Context is key and most novice investors and traders (including the countless number of bull market “geniuses”) fail to consider such an important source of information. (Note to geniuses: the smaller the time frame, the more random).
As of the 40K break, Bitcoin and the entire ALT coin space have signaled that they are likely in a Wave 4 corrective consolidation (this offers IMPORTANT context). These type of consolidations can go on for months and can be very confusing, especially for those who lack patience. IF price can establish a higher low or near 30K, and attracts enough buying activity to take it back above the 40K to 43K resistance, then the next area of resistance is 48K to 50K. These are the areas we consider for potential profit targets IF we get into a new swing trade long (not 60K).
What about the RISK? 30K is the current support and offers a reasonable area to define risk from. IF it breaks (which is still a reasonable possibility), then 26K and then 20K are the next support levels. This is NOT about “predicting” a break, it is about IF the market PROVES to break or NOT. LISTEN to the market.
So IF a new buy signal develops above the current candle high, and risk can be contained around 5 to 6K points, we can justify an AGGRESSIVE swing trade long idea. The objective will be for price to reach back into the mid 40Ks over the next week or two. Until the 40K swing high is compromised the short term momentum is arguably (which is why a swing trade long from here is categorized as aggressive).
Thank you for considering my analysis and perspective. I hope you find it to be helpful.