BTCUSD: Price Aims Higher As Risk Increases.

BTCUSD update: Minor consolidation forming above the positive sloping trend line which is likely to lead to a bullish break out. Triangles are trend continuation patterns and so far the momentum as defined by price structure remains bullish.

As price is poised to climb higher, our concern is the over head resistance located in the high 7400's and above (not on chart). This along with the fact that the higher price goes, the higher the risk of retrace. At S.C., we do not react to price action, we evaluate and anticipate.

For our swing trade methodology, the current location makes putting on new trades too aggressive. Less experienced traders do not realize that not every setup is high quality, especially since they hunger for action.

One of the toughest lessons to learn is the market will occasionally reward bad habits. Over trading, low probability trades, buying highs, etc. This phenomenon is no different than when a casino game randomly rewards a player. This ignites hope, and stimulates further play. There is no such thing as a professional slot machine player is there?

This is why having criteria and sticking to it is so important, no matter what the market is showing. And Bitcoin is in one of those situations where it is showing a potential setup, but the risk is high. Best practices prevent us from buying into such conditions.

In summary, at S.C. we have a swing trade plan that governs what trade setups we can take. Bitcoin may push higher, but the risk outweighs the potential reward at this point.

Like I wrote in my article earlier today, a retrace to 7K or into the 6800 area presents a much more attractive opportunity. What separates our research from many is that we do no pretend to know where price is going next. Instead we are open to the possibilities of where it can go, and then let the market prove itself. If it aligns with our criteria, then great we have a trade. If it does not, then we sit it out, no matter how great the chart may look.

This simple form of discipline is why our performance record is in the positive. Much of it has less to do with hitting home run 10,000% trades and more to do with avoiding many would be losses.

I often remind our followers that successful market timing has as much to do with a good defense as it does a good offense. No one wants to hear it though, because defense is never fun or appreciated since the majority of traders are focused on profits.

True the purpose of putting money to work is to gain a return. The mistake is in following the natural instinct of obsessing over the return which is what contributes to its elusiveness.

All of this translates into: timing is about organizing information, following rules, and waiting for the market to conform to criteria. And yes, it is far from the excitement and glamour portrayed by the financial media. If you want excitement, casinos offer a much better experience for your emotional needs.