Bitcoin: Structure Worth The Wait?

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Bitcoin update: Since the exit of our long swing trade two weeks ago, this market has not offered any worthwhile opportunities to get back in. So we have been doing what we do best: WAITING. Waiting is actually why our swing trade performance across multiple markets is in the green. Waiting is what pays in the long run and NOW Bitcoin is beginning to provide compelling reasons to pay closer attention for a new setup to go long.

The 3550 and 3700 levels are where we have been anticipating support. We have been writing about these levels and sharing a lot of insight about the recent activity with our followers over the previous two weeks. The point of our message has been: just because a bullish candle alone may show up in the right location is not enough of a reason to get back in. What we need to see is a better defined structure.

And today, that structure has established itself. The Bitcoin chart is now showing a failed low formation in a general area of support. It took a few weeks, but THIS is what we WAIT for. Now it is a matter of identifying some form of confirmation. This is where momentum continuation patterns come into play.

Candlestick patterns like a bullish pin bar or inside bar would be a welcome confirmation at this point. If the market provides the criteria we need to enter, then our targets would again be in the low 4Ks. We don't react, we WAIT.

Now what can go wrong from here? The risk that we carefully consider is the fact that Bitcoin is still fluctuating in the middle of a very wide range. Inside such ranges, follow through is often limited. We would rather miss a few small profits in order to avoid constant losses generated from over trading and getting faked out.

In summary, with the failed low in place, we are much more interested in continuation patterns that develop. Another positive that adds to this context is the Litecoin high. Andrew has been on top of this and highlighting its strength since the break out at 34. This makes the Bitcoin price action even more credible since it provides some evidence that there is buying across the board.

Trading more in this environment is not as effective as WAITING more.Bitcoin has not met our criteria of being in a broader trend, and until that occurs, we remain cautious. We WAIT. Patterns and setups are not created equal. Some offer a higher probability than others and weighting them is a function of knowing the CONTEXT of your environment.

And knowing the quality of your environment is a function of asking the right questions. Many new traders often want to know the best way to learn this framework of thinking and my answer is: learn to play Poker. It is more than just a game of bluffing. It is a game that requires adjusting your betting based on a multitude of variables that change as each betting round unfolds. In Poker, just like in market timing, a strong hand or a good setup can lose its value quickly. You must be able to recognize when it is better to throw that hand away even with a small loss and WAIT for a better situation. You can learn more about decision making from Poker than you can from watching a chart. Whether you are playing cards or timing a market, learning to WAIT is the best skill you develop. Learn the art of the WAIT.