Bitcoin: Lingering Strength.

Bitcoin has been in tight range between the 29.5K support and 31K resistance for about a week. This can be a confusing area for some, especially those who think this is the "top". In this analysis I am going to lay out a couple of points to consider. Again this game is about interpreting and adjusting to new information as the market provides it, NOT to get stuck on irrelevant opinions.

Interestingly enough my Trade Scanner has generated 4 long signals for Bitcoin which have all offered some amount of profit, while at the same time, it is generating sell signals for some of the popular alt coins like MATIC, BNB, etc. What is going on here? This is a typical sign of relative weakness. It means that IF Bitcoin retraces further and takes out the 29.5 to 28K support zone (see blue square on chart), then these alts are likely to outperform on the short side. IF Bitcoin breaks the 31K resistance on the other hand, the shorts are not likely to perform. Since Bitcoin is still in a broader bullish trend, it is makes more sense to bet on the bullish break out until it proves otherwise. I often remind followers that counter trend signals or conflicting situations like these should be considered with LOW expectations or not at all. Bitcoin is the leader, like the S&P500 is for stocks.

What about the Bitcoin hesitation at 31K? Isn't this a bearish sign? Not in the context of a broader bullish structure. Weakness is often asserted QUICKLY around resistance levels. When price lingers around a resistance level, it is often a sign of strength. In terms of order flow, what typically happens in these situations is lots of shorts pile in, mistaking price hesitation for weakness. IF there is any bullish catalyst that comes out of no where, these shorts are going to contribute significantly to the bullish break out since they will get squeezed out of their positions. I'm not biased, I am just describing the situation that probability tends to favor based on other structural factors such as trend and levels.

How am I going to trade around this situation? For one, I am not interested in swing trades in the 31K area long or short. On the swing trade time frame and for Bitcoin in particular I prefer high probability signals on the side of the broader trend (and I still don't short Bitcoin). This means I have to WAIT for a test of the 28K support zone. If the market breaks out without such a test, then I miss the swing trade. I'm okay with that.

As far as smaller time frames, I am open to day trades if I see signals in the 30K area (like the trade scanner has been generating). The thing is, expectations have to be VERY low. That means if I can get away with 200 to 400 points, that is a win. Whether the market breaks out or not is irrelevant when I work with smaller time frames. Having an objective mindset improves your chances of a consistently positive performance NOT a GREED mindset.

One of the most common beginner mistakes I see is trying to maximize profits. To play this game successfully, you have to learn how to maximize PROBABILITIES for the LEAST amount of RISK. By letting greed shape your decisions, you only set yourself up as profit potential for someone else.

Thank you for considering my analysis and perspective.