Bitcoin: Tough Spot For Longs?

Apr 24, 2022

The 42K to 45K resistance area (lower high) continues to hold (blue rectangle) which implies a lower low is likely to follow. This situation continues to reinforce the possibility of testing the 35K support AND since the environment is no longer favorable, a break of that major support.

For the swing trade strategy that I employ, this means: it is more reasonable to expect resistance levels to hold and supports to break. If supports are more likely to break, then I should either be extremely selective with long setups while restricting profit expectations to the minimum (1:1 R/R) OR completely avoid longs until a change in price structure is clear (changing price structure can take WEEKS to unfold).

Shorting Bitcoin is not within the scope of my strategy (if I want to get short, there are plenty of other markets). The thing is, when it is OBVIOUS like it is right now, the risk of getting caught in a short squeeze is high. So if you are overly eager to get short, at LEAST wait for a more favorable price location like the 42K resistance OR a break lower followed by a retrace to the 38K minor resistance (which is the current support at the moment).

That is the REALITY of a swing trade strategy, quality opportunities are RARE and require a lot of WAITING. More is NOT better in this game (although human nature and the entire industry would like you to believe that more is better).

For those who are unable to control themselves and must have action, then you are looking at day trade possibilities. The problem here is if you have no experience and no statistical advantage, then you are only wasting your time. Winning randomly is equivalent to playing a slot machine. If there was ANY advantage to using charts, oscillators and/or other gimmicks, the retail trader performance statistics would be a LOT better than they are. It is important to understand how this industry works and how you fit in. Retail traders provide the means for others to profit.

Blind optimism is baked into EVERYTHING that you watch or read on the internet. To begin to separate yourself, you must first accept: 1) markets are mostly random and EFFICIENT. 2) You cannot beat efficient markets. 3) NO ONE KNOWS ANYTHING, and MOST public information is irrelevant ESPECIALLY if it is shared for free.

The easy time in the market (easy monetary policy) is over for now. You are going to learn very quickly that hope will not help you. If you want to have more control over your outcomes, you have to learn what a quality opportunity looks like and WHY that opportunity should repeat itself in terms of market psychology.

As markets only continue to become more efficient, we have to focus our attention on information that reflects temporary imbalances in sentiment. Having a strong grasp of market psychology and how it unfolds is one of the few ways to manage any type of consistency in this game. Human nature is a liability in the arena of an abstract and random environment. So where to begin? Be a contrarian. When consuming public information, consider the opposite (this is how forex brokers make money).

This may be confusing but a simple way to begin to change your mindset is to get in the habit of projecting levels. Opportunities of any significance often appear at levels where you can anticipate a particular type of price behavior in advance. Don't trade the levels, because managing risk is another story, just learn to recognize them and NOT REACT to what is going on in the moment. (35K on Bitcoin may break OR it may present a clear long setup which risk can be quantified from).

Thank you for considering my analysis and perspective. I hope you find it helpful.