Overview:

Most of swing and position trading is time spent doing nothing.  Though many trade every day I have found over the years that it is best to wait for a setup.  Over the past couple days I have received a few emails and a couple text messages asking whether I think this is a good place to buy, or whether we are moving higher or lower.  My response is the same as it was a year ago.  In the long term 3-5 years out, I believe we move higher.  Well some don’t have the patience, and many swing traders are looking for the next trade.  So what is the chart telling us here?

Unlike the stock market where there are thousands of stocks, and if you spend the time searching daily you can find a setup, with the crypto space, it is really not the same.  Even the likes of EOS or LTC, which have better structure than most of the others, the market has pretty much been correlated over the past year, with few exceptions.  The question is in the short term, will the market move higher or lower?  Is there some secret oscillator or indicator that can provide any indication or are we simply guessing?

The truth is if we had to pick a direction in the next few days, we would simply be guessing.  This is the only thing the chart is telling us right now.

BTCUSD
Bitcoin:

No Man's Land

Currently we are simply consolidating within a narrow horizontal channel between 3760 and 3850.  The two spikes outside the channel are simply noise and since neither bore any fruit, they are meaningless in the scope of things.  Other than a few brief minutes of action the market has been range bound and looking for direction.  No moving average or oscillator is going to tell you what comes next, all it is telling you is what happened in the past.

As conservative traders, we look for specific setups, and there is honestly no setup here for a long, and shorting in this area is a recipe for portfolio erosion.  Regardless the chart is providing us with not enough information here, and this is why we simply wait for a more clear setup.  This comes in the form of structure.

Currently we have a single leg down and an attempt to build a support base.  It would not be surprising to see bitcoin make another leg lower to the 3550 area or even the mid 3400’s here and it would not discount a broader bullish swing in the mid term.  Technically it can retest the previous low, and still be considered an initial impulse wave.  In short we need to see some structure not just a single leg down and 5 days of consolidation.

It is Really Subjective

There is really no shorter term defined trend structure to put any weight for a breakout to the long side, or a breakout to the down side.  If you are looking for someone to confirm your opinion, there are plenty of “go longs” or “go short” across TV and other such platforms.  The reality is, the market is simply looking for direction.   We could make some observations like the price has been holding around the 3800 area, but this is not really telling of anything other than a mixed market.

The long candle is not a good sign however, and it may imply and we should be prepared for another leg lower.  But take into account we are consolidating at a support area which is a probable area for a reversal.  In the end we just do not know, and regardless of the RSI, MACD or EMA’s they are simply telling you what is already apparent with the price action.

Once we get a breakout one way or the other, THEN we can look for entry levels for a swing trade, but until then we just have to be patient and let the market find itself.

With all this said, in months ahead I believe we start to grind higher towards the end of year target of 9500.  If you are investing, and have been looking to add, throwing on a small position here, and keeping some cash on the side in the event we do pullback further is not unwarranted.  Of course this is dependent on whether you are willing and able to take some pain in the short term.

As far as swing trading, well we really need to see some further development of the structure before we will issue a trade.  There is not trade setup here, and the only thing a trader would be doing is guessing, which is a prelude to gambling.

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