Bitcoin Retrace After 5 Waves?

[Ronald Ray]

After some brief consolidation, a new buy signal has appeared off of the 23K level, but what is NOT obvious to the herd is the low probability. From the SWING TRADE perspective, this would NOT be a buy signal to capitalize on. There are two factors that emphasize this: level and wave count.

1. Level refers to support/resistance: At this time, Bitcoin is above the 22K support and about 1300 points below the 25K resistance. 25K is historically significant, and is a location where selling activity is LIKELY to assert itself. If you took a swing trade long from lower prices, this would be a time to give the trade a chance to see how it behaves IF it can probe into the 24Ks or test the 25K level. Can't it break through 25K like all the frauds like to promote? Anything is possible but it is better to respect probabilities than it is to believe in Santa Claus.

2. Wave Count: The bullish impulse I am referring to originate from the December low. It is possible to clearly count 5 waves into the current high. This OFTEN means the current bullish move does not have much left in it and that a broader retrace into the 22K or 20K supports is more reasonable to expect over the next two weeks, IF this retrace unfolds, it can potentially become a Wave 4 with the possibility of testing the high once more. Please note: IF this structure overlaps Wave 1, then it cancels out the entire expectation.

This analysis pertains to the swing trade perspective. This particular time frame has periods when the risk is too high to justify taking risk and requires a LOT of waiting (could be weeks). The solution to this is to work on smaller time frames to mitigate the large magnitude of risk while participating in the brief spurts of momentum.If the risk expectation is smaller, the profit expectation must also be in proportion. If you take a day trade with a swing trade price target, you are highly likely to be stopped out.

It is important to UNDERSTAND: Markets are HIGHLY random. This means a LOT of things: setups can appear randomly, levels can be broken randomly, markets cannot be forecast far into the future and ANYONE (especially those who HIDE from accountability) can make calls that appear to be right. IF consistency is your goal, then being able to recognize probabilities AND playing good defense is what improves your chances. Defense means cutting losses EFFECTIVELY or being able to AVOID a loss altogether. Losing trades and our own behavior are the only things we CAN control.

Thank you for considering my analysis and perspective. I hope you find it helpful.