Bitcoin Bears: New Sell Signal, But Where's The Follow Through?

Bitcoin: Based on our swing trade strategy, a new sell signal will be in effect upon the break of the 10,200 level. IF momentum follows through, and price clears the 9850 minor support, then it is within reason to see a test of the 9150 inflection point over the following week. Risk for this trade idea can be defined from the 10,500 area.

We do not short Bitcoin because it is not within the scope of our risk criteria. Many do not understand this choice usually because of a focus on profit, but our focus is on RISK. Since it is not within our plan to trade a short signal, it doesn't mean we ignore the information.

For those who are interested in a swing trade short, here are some points to consider:

1. If price lingers around the 9850 support, and does not clear it quickly, it is very possible to see another fake out. While bearish momentum (off the 12K high) is in effect, it does not mean the broader trend has changed. We define the trend from the March low and at this point it is still BULLISH. It can reassert itself at any moment.

2. IF the 9850 is cleared, (and no fake outs around 9600s, see blue box on chart), the next point of major support is the 9150 area. This is the key trend support and is what we use to define the broader trend as bullish. IF short, and price reaches this area, it is not a bad idea to take profits, or reduce risk significantly because probability favors a broader bullish reversal around this location.

As for our LONG only strategy, we have no choice but to WAIT for the criteria to be met for a new buy signal. Consistent results come from following a plan, not reacting to signals. Our goal is to identify those infrequent occurrences when randomness is the least, and trade positions where probabilities are more in our favor. And the more we can remove ourselves from the decision making process, the better.