Bitcoin' exceeded our initial target level and is consolidating nicely around the 9900 level. Similarly it consolidated in late November at this same level before the December rally. This is a critical support and resistance level as you can see on the chart below. Though the market is still mixed, most blue chip coins are recovering strongly including Bitcoin' Cash, Litecoin' and Ethereum'; However, Bitcoin is still the 600lb Gorilla in the space and in my opinion will retain that title.
A break of the 11k level increases the likely hood that the correction is over and we have started wave 5 of the overall super cycle. A break of 14.5k and we can conclude the correction is over and look to make a final rally including a new All Time High before any significant correction. As I mentioned a couple days ago I do not use stop losses and I also do not just sell at targets. I believe Richard Dennis, one of the Greats, mentioned in an interview (I can not find the exact quote so I did not put it in quotes) The problem with traders is they exit too early often missing huge gains in the market. The problem with Investors is they often hold to long erasing the gains they had. The intent of the 70/30 portfolio is to avoid both of these issues.
The reason I have not closed the trade even though it hit the target level is simple. We are likely in a 3rd wave. I want to be long through third waves and not start closing trades and shaving off in 5th waves not 3rd. So there is no reason to sell here. Markets pullback and take breathers. A pullback to the 9100-9500 level is possible as these are the 0.382 and 0.618 retracement of the previous bullish movement. Mid term I am looking at a target level of 10925-11335 for completion of this move, but we may adjust as the market proceeds.
The RSI on the 8 hour is testing and consolidating around the 60 level. A fail of 50 MAY signal that we fell into a bull trap. However a breakout of 60 we likely test 80+. Bull equities trade between 40-80 and bear between 30-60. So we are not out of the woods yet, but weekends are historically strong for Bitcoin' though they have struggled as of late.
Bottom Line: If you are trading in and out, in and out, you are likely chasing the market. Traders have a tendency to sell winning trades too early. The market is slowly stepping to the upside and we need to keep the broader term picture in perspective and not have an impulse to buy and sell on the way up. I'm simply staying LONG here!
For the record I drew the cup and handle pattern there as a reminder that the trend creates the pattern and not vice versa. Patterns must be taken in the context of the overall market conditions and overall market sentiment. What we were seeing was a slow change in sentiment off an extreme low. With that said that is a beautiful pattern!
A break of the 11k level increases the likely hood that the correction is over and we have started wave 5 of the overall super cycle. A break of 14.5k and we can conclude the correction is over and look to make a final rally including a new All Time High before any significant correction. As I mentioned a couple days ago I do not use stop losses and I also do not just sell at targets. I believe Richard Dennis, one of the Greats, mentioned in an interview (I can not find the exact quote so I did not put it in quotes) The problem with traders is they exit too early often missing huge gains in the market. The problem with Investors is they often hold to long erasing the gains they had. The intent of the 70/30 portfolio is to avoid both of these issues.
The reason I have not closed the trade even though it hit the target level is simple. We are likely in a 3rd wave. I want to be long through third waves and not start closing trades and shaving off in 5th waves not 3rd. So there is no reason to sell here. Markets pullback and take breathers. A pullback to the 9100-9500 level is possible as these are the 0.382 and 0.618 retracement of the previous bullish movement. Mid term I am looking at a target level of 10925-11335 for completion of this move, but we may adjust as the market proceeds.
The RSI on the 8 hour is testing and consolidating around the 60 level. A fail of 50 MAY signal that we fell into a bull trap. However a breakout of 60 we likely test 80+. Bull equities trade between 40-80 and bear between 30-60. So we are not out of the woods yet, but weekends are historically strong for Bitcoin' though they have struggled as of late.
Bottom Line: If you are trading in and out, in and out, you are likely chasing the market. Traders have a tendency to sell winning trades too early. The market is slowly stepping to the upside and we need to keep the broader term picture in perspective and not have an impulse to buy and sell on the way up. I'm simply staying LONG here!
For the record I drew the cup and handle pattern there as a reminder that the trend creates the pattern and not vice versa. Patterns must be taken in the context of the overall market conditions and overall market sentiment. What we were seeing was a slow change in sentiment off an extreme low. With that said that is a beautiful pattern!
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Though it appears that we are topping I believe we get one more mini rally to the 11,115 level before pulling back to the new support level.
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We are still are bullish as we have broken through the 11,246 level and the 11,500 level where I thought we would see some resistance. We can still see some but we are not seeing it yet. Here is an update as to the next level we are looking at and the 13,555 level which as we move we are beginning to zone in on the levels shown initially between 12,800 and 14,600.
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This is the longer term trend channel and why we thought 11,300 area would be a consolidation level. Right now we keep this in mind, but until we see weakness as @marcpmarkets pointed out this morning we milk what we can out of our position at 9700. This helps reduce the positions we added in the 13's. It is a marathon and not a sprint, and coming in in partial positions has provided us with multiple trade levels and reduced our exposure. Big Positions = Big Problems. It was just two weeks ago that we were hell bound to zero by many!
