Bitcoin: Almost Time To Buy More For The Portfolio?

15 mar 2020

#Bitcoin. Is it going to 0 like all the overly reactive bears are suggesting? As ugly as the current chart looks, as long as it continues to serve its practical purpose as a money transmission mechanism, it is more likely to find stability sooner. Opinions aside, as a trader and investor, I am only interested in ONE thing, and that is ORDER FLOW. As I mention to our followers regularly, people VOTE with their money. And there are many large players out there who have much higher quality information than me. Instead of having to chase news, and drama and go nuts trying to make sense of all the noise, all I have to do is identify the foot prints of the smart money. And this can be done with order flow.

In this video, I am pointing out the adjusted inflection points where I anticipate changes in order flow. Charts do NOT help us predict anything, but they do provide a point of reference to measure PROBABILITIES from. These are the following points that I cover in the video.

1. Price has taken out 2 major support zones in one day. A move from 8k to 3K in such a short period of time is extremely RARE. This move certainly requires an adjusted short term outlook, but the long term fundamentals are still intact. This means while structure is now bearish, we will be more conservative when evaluating swing trade setups and more open to position trades (inventory accumulation).

2. 5464 is the lower boundary of the broad support zone where bullish reversal activity is most likely to occur. While price touched the 3Ks, is swiftly returned to this area. Along with that, it established a very large bullish candle. This is usually a sign of being over sold, at least temporarily. In order for us to consider swing trades, this market needs to develop structure and that can take days/weeks. Buying too early on an opinion or hunch will only provide rewards randomly.

3. With such a magnitude of bearish momentum, it is possible to retrace back into the 4Ks or lower in order to establish a double bottom or higher low. In order for us to justify swing trades within our usual risk parameters (2 to 3%), Bitcoin needs to close above 6425. Until such stability presents itself, if we see any bullish reversal patterns we can only justify risking 1%. For our portfolio strategy, (SEPARATE from our swing trades), we purchased some in the 8Ks, and looking to purchase more as price builds out a new support range. Inventory management is about strategic position sizing and waiting for opportunities like this to establish a better average price. The goal is to partial out when price tests proportional resistance levels (mid 8ks to 9k at this point).

In these highly unusual situations, the worst thing you can do is develop a false sense of confidence that comes with receiving a random reward from the market (or follow someone who has). Consistent performance comes from repetition of effective behaviors, not lottery tickets. You will come across many self proclaimed experts who are showcasing how "right" they were this one time, but who will most likely not share any legitimate public record of their performance (1 year at minimum).

Random rewards often reinforce bad habits, such as selling near lows or buying near highs. It is human nature to cling to the obvious, because we thrive on organization, order and logic. Price movements are not motivated by logic, they are motivated by fear which means logic won't help you in this environment for any market, not just Bitcoin.

As a retail trader without access to non public information, I must rely on two things: 1) extracting the most actionable information from all the noise, 2) adhering to my rules which govern my capacity for risk. That's the best I can do to compete in such a random environment. The charts offer clues to help isolate opportunities (order flow) and my rules protect me when I'm wrong. I realize it is unsexy and unpopular, but if you are not an insider, then this is the pill of reality that you must swallow in order to achieve any kind of consistency in this game of crowd psychology.