Bitcoin: Stay Small Or Stay Out.

Bitcoin price action continues to linger at the 31K resistance. The appearance of a bearish outside like candle does not bolster the bullish argument. The key to effectively navigating these situations is to keep expectations small or simply stay out until new information presents itself.

When I say keep expectations small, this is best achieved by evaluating reward / risk on smaller time frames (day trade). While this consolidation between 28.5 and 31K still implies an absence of weakness, it can also be the result of lower than usual volume typical of this time of year. In my previous article I wrote that lingering at a resistance often implies strength, but this can change, especially when too many break out attempts fail. Consider that every time there is a break out attempt, new longs continue to pile in but get absorbed.

The most recent break out attempt (the third one) should have been the one to push through the resistance IF Bitcoin is in fact strong. My concern now is this failed break out attempt has attracted more longs. These longs which should have instigated the momentum to follow through are now stuck. It is these same longs that can motivate the sell off when they all look to exit at the same time. All it takes is a piece of unexpected news. This is NOT a forecast, but the idea leads me to believe that Bitcoin may be getting vulnerable to a corrective move if 31K is not taken out in the next week or two.

I am still waiting for the 28.5 to 29.5 support zone (blue square on chart). To see if the appropriate reversal appears for a potential swing trade long. IF instead that level is compromised, I step aside. The next support is the 25K area.

The mistakes to avoid in this environment: do NOT over trade, it is very easy to do when NOTHING is going on. Do NOT cling to your own logic (markets do not operate on logic), do NOT buy into any over exaggerated claims, opinions, analysis from your favorite frauds. Most of these "experts" are not qualified to offer such "educational" content.

There is NO way to know how Bitcoin will behave from here. No matter how many lines, or oscillators one has on a chart. Markets are MOSTLY random and adjust as NEW information is processed. Unless you have inside information, you know as much as the next "expert".

This is why I tell my followers to keep expectations low. Whether they take a trend or counter trend trade, if its a losing trade, and the stop is respected, the loss should be small. More importantly by working on smaller time frames, you mitigate the broader magnitude risk. This is the best way to avoid getting caught on the wrong side and wiping out an account. Stay small or stay out.

Thank you for considering my analysis and perspective.