Feb 11th 2019, Crypto Chartbook

Bitcoin – “What now”?

After an initial thrust move has happened, this is the classical question most traders ask themselves. Reactionary trading is just that – the uncertainty of price directional change partially gone, but a low risk entry point vanished as well.

What now? One feels confirmed in ones belief that maybe there might be a follow through, but can’t accept the risk. It is the contrarian trader, who enjoys the much lower risk factor, but has the psychological challenge to step up to the plate, when things do not look that clear and rosy just yet.

We prefer this approach since there is no trading approach quite simple in nature toward human psychology. At least the contrarian one provides these low risk entries.

February 8th provided just such a scenario when BTC moved up 10% within a few hours:

BTCUSDT daily chart as of February 11th, 2019

BTCUSDT daily chart as of February 11th, 2019

28 prior trading days highs got taken out within a few hours! What now? After a 10% move it is hard to be a participant. Where to enter, where to put a stop….?

We as contrarian traders were positioned before all this happened and took partial profits along the way. Another example of why we advocate the “Quad Exit Strategy“.

The Quad Exit Strategy honors the principal of “Choices” (=I am all in and my system has a high expectancy of immediate profits, so I exit half of my position for immediate financing of the trade meaning I get out with half for small profits. I will take another 25% of position on my first target and another 25% on my 2nd final target).

A low volume weekend followed, with prices ranging on a price level band suggesting strength (white s/r lines):

BTCUSDT hourly chart as of February 11th, 2019

BTCUSDT hourly chart as of February 11th, 2019

What now? Fear of missing out might creep in and suggests a breakout trade from this weekends congestion zone, for all those who aren’t positioned yet. But again: Where to put the stop, and how far will the move reach to provide for an acceptable risk reward ratio…?

In our humble opinion only an entry of a retracement to lower support /resistance price zones is sensible from a risk perspective at this point.

So as attractive as weekly charts might be, it isn’t always easy to be a market participant, if not in early:

BTCUSDT weekly chart as of February 11th, 2019

BTCUSDT weekly chart as of February 11th, 2019

And monthly charts do not suggest to simply step up a time frame, which would allow for wider stops:

BTCUSDT monthly chart as of February 11th, 2019

BTCUSDT monthly chart as of February 11th, 2019

It leaves the professional with no other choice than stepping up to the plate at a time uncomfortable to the mind, and doing so with confidence. Once prices have advanced to levels clear to the whole world, of a possible change in direction, opportunity cost is rising to levels unacceptable for the low risk trader.

All charts timely posted in our telegram channel.

About the Author:

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.


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