Bitcoin Range: Avoid This Common Trading Mistake.

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Bitcoin continues to range between 10K and 10,400. That’s a tight range for such a wild and emotional market and it can easily lure you into misleading signals that only erode your account. In this article I will briefly explain why our Bitcoin outlook continues to be bullish and how to avoid the most common trading mistake in this environment. Without any self organization or rules to filter such price action, you are more likely to react to meaningless noise.

Bitcoin continues to range between 10K and 10,400. That’s a tight range for such a wild and emotional market and it can easily lure you into misleading signals that only erode your account. In this article I will briefly explain why our Bitcoin outlook continues to be bullish and how to avoid the most common trading mistake in this environment. Without any self organization or rules to filter such price action, you are more likely to react to meaningless noise.

The Range Continues?

It may seem repetitive, but this market has made NO progress since the range high and low have been established in July. All of the price action has been between 14K and 9K. And the most important piece of information that comes from this? Bitcoin is NOT trending. That means trend following strategies that aim to capture broader movements will not perform well.

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How Do You Define A Trend?

Trends can be identified on multiple magnitudes and this is where new traders and investors lack the most understanding. Since we focus on swing trades, we STICK to information that relates ONLY to that time frame. In other words, in this situation we FOCUS on the daily time frame.

Incorporating smaller time frame charts for example, will only lead to confusion and numerous stop outs. Smaller time frames are more appropriate for day trading and we do NOT day trade.

And on our relevant time frame for our swing trade strategy, there are clues that continue to imply strength in this market. Here is what continues to keep us from adjusting or interfering with our current long position:

1. Price has maintained the 9K range low since July.

2. 9806 to 10,338 is a minor support proportional to the bullish swing established in August.

3. A higher low has been established at the 9800 area.

4. 9750 is the .382 proportion of the entire bullish swing from 3150 to 14K.

5. Candlesticks have produced a series of inside bars and now a bullish pin bar within a high probability support zone.

None of these elements are bearish and continue to point to greater bullish potential. The proportional resistance zone is the 11,600 to the 12,300 range. This is the area where we can reasonably measure profit potential from.

Bitcoin: Location Carries The Weight?

Location favors longs even when price action doesn’t agree.

Buy And Sell Signals Are Not All Equal?

The most common mistake new traders make in this situation is they place equal weight on any buy and sell signals that appear in the area. This is a result of NOT having specific criteria to follow, along with asserting one’s feelings or ideas rather than letting the market choose for you.

Buy signals on the appropriate time frame carry more weight than sell signals. Why? The location is a proven large magnitude support region which is more favorable toward LONGS.

In my recent webinar, I mentioned that a break of the 10,150 level would generate a new swing trade sell signal. We recognized it, we considered it, BUT we did NOT react to it. We wanted to see how the next candle developed because we were THINKING about adjusting our stop loss order closer.

It’s a sell signal though! Why would we not take action? Because we KNOW that probability favors buying, NOT selling. The more likely outcome is another bearish fake out, which is in the process of developing now. Usually the better choice is to do NOTHING, especially in tight ranges. And the market told us to do just that.

The point here is when you know your probabilities, and you are confident, you won’t react to every adverse piece of information that the market throws your way. Not all signals, patterns and formations are equal. Do you now understand why utilizing CONTEXT is so important?

In this article I explained why Bitcoin still presents clear bullish arguments. I also described how traders are lured into confusion and getting caught reacting to low probability signals.

If you find yourself in this situation often, the easiest fixes are to first choose a specific time horizon: day trade, swing trade or position trade. Then learn to FOCUS and interpret the price action off of ONE CLEAN chart.

Larger time frames like swing and position trades are usually a better choice for newer traders, but they require PATIENCE. This is what separates the traders and investors from the gamblers. Which one are you?

Questions and comments welcome.

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