Bitcoin: 42,850 Swing Trade Setup.

Bitcoin consolidation within a Wave 4 which is poised for one more leg higher (Wave 5) IF the 40K support holds over the coming week. At this time, a break above 42,850 will signal a swing trade long in anticipation of a test of the 45K high. IF price breaks lower instead, I will be watching for a test and reversal confirmation around the 40K level support (See blue square on chart).

The next two weeks are likely to be filled with optimism, positive news, etc which is typical this time of year. Volume is also likely to get lighter which can make for lack of follow through OR slow grinds which are especially tricky (and costly) for counter trend strategies.

The outcome of Wednesday's FOMC meeting set the tone. The S&P, Nasdaq, Russell 2000, Ten Year Note have gone vertical pricing in a dovish future. PLEASE keep in mind, just because the market is pricing this in does NOT mean something unexpected can't come along in Q1 or Q2 of next year. It is easy to get caught in the hype and think "its strong, its safe" and usually this is when risk is the GREATEST (see S&P in December of 2021).

In my opinion the best way to control risk and avoid getting caught is by keeping expectations LOW on BOTH sides of the market. Don't fight the momentum, while at the same time, it is not wise to expect that higher highs will just relentlessly continue. Day trade strategies are best OR just stay out and WAIT for a broader retrace. It may take a month.

This is why I cannot emphasize enough the importance of sticking to a well defined system that identifies particular setups in your chosen market. My Trade Scanner is a testament to this because while it does not produce a 100% win rate (nothing does), it has identified over a dozen winning trades over the previous 2 weeks across 3 asset classes (see results page).

It really pays to understand what you are up against as a retail trader before you can appreciate the value of automation. To use a poker reference: imagine the advantage you would have over your opponents IF you could see their cards. THAT is the advantage that exchanges, market makers, dealers and other counter parties have over all of US. THINK about that the next time you are wondering why you can never seem to make consistent money in this game.

Thank you for considering my analysis and perspective.