Bitcoin: Where Are The Better Setups?

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Updated: Jun 30, 2021, 13:18 GMT+00:00

Bitcoin makes some progress above the 35K minor resistance. This is a positive sign for recent longs from the 30K to 32K area but NOT a good location for new longs. If you missed the buy signals off the lows, that was where the reward/risk was adequate. Chasing Bitcoin now means you have to assume much higher risk and a much tougher time justifying that risk at the potential profit levels.

If you weren’t willing to take risk at much more attractive levels, why would you think these levels are any better? Because it “looks” stronger? The more effective thing to consider is what you CAN’T SEE. The 35K area is in the middle of the recent consolidation between 28.5K and 41K. Often these locations are highly random in terms of price action and if anything offer a better opportunity to reduce risk, NOT put on more.

If the price closes STRONG beyond 35K, that increases the chance of testing the higher part of the range of the 41K area over the next few days. Some of our profit targets our within the 35K to 40K area for this reason. In order for the bearish structure to be negated, price needs to close decisively ABOVE 41K.

What makes new trades in this area so risky is this: price can easily find resistance as it nears 40K. It can reasonably fail and test the low 30s again. If you buy at 36K for example, and it goes to 38K and turns back, you have to basically risk between 6 and 8K to potentially gain 2 to 4K. You cannot generate positive returns over time with this kind of ratio.

At this point, if you are not in, the BEST thing to do is WAIT for the next opportunity. The two scenarios we would consider are 1) Price tests the 30K area again followed by a new buy signal and confirmation or 2) price clears 41K and then pulls back and establishes a new support level to define risk from. Scenario 2 means the entry price can be much higher, BUT in this situation, the broader price structure will be much more favorable than it is now. We have no problem forfeiting lower prices for a more favorable environment (bullish structure rather than consolidation).

Keep in mind this process can take days or even weeks to play out. Over the recent month we have shared three Bitcoin signals to give you some perspective in terms of the frequency of our rules based LONG only swing trade strategy. If you take more trades than that, and you are not a day trader, then you are over trading because there aren’t that many quality opportunities in this environment. Minimizing price noise is one great benefit to having a well defined set of rules.

If you would like to know more about how our swing trade strategy works, please visit.