Bitcoin: 10K Short Squeeze Location Still In Play?

Bitcoin is still NOT in a trend relative to how we evaluate the bigger technical picture. This piece of information alone serves as an important guide when it comes to managing our recent swing trade long. The aim of this article is to provide insight into the best practices and mindset that has produced consistent results throughout the recent bearish and bullish conditions of Bitcoin.

It is important to understand the objective of our LONG only strategy. We did not choose to work from one side of Bitcoin because of some inflexible opinion of the future. We made this strict choice because using leverage, and being subjected to the individual rules and whims of each exchange does NOT appeal to our risk profile. It is a personal preference that helps to construct boundaries around our decision making process for our swing trade strategy (which is NOT the same as our position trade or inventory strategy).

What many new traders and investors fail to realize is that timing ANY market over the short term is a game of psychology, yours relative to the market crowd. The game is set in an uncertain environment that generates a constant flow of information accompanied by a high degree of randomness. The ONLY element we can control is our own behavior which translates into one thing: HOW WE MANAGE RISK. It is an environment where YOU must create the rules, and NOT succumb to the whims and impulses of our human programming (intuition, feelings, bias).

So we have rules that define what a trend and what a consolidation is. Bitcoin has been gyrating within a range of corrective consolidation since June. NOTHING HAS CHANGED, even though your friends who are publishing 1 hour charts may suggest otherwise. By sticking to our rules on how to navigate a range bound environment, we can operate with REALISTIC expectations as far as risk (where to place stop orders) and profit targets. All the other experts? Too busy projecting the next outrageously unrealistic high or low.

Our mindset and strategy has allowed us to share two swing trade long ideas over the previous two weeks. One triggered at 10,435 while the other at 10,255. I can't provide any more specifics, but I can say our profit targets for both of these ideas are below the 12K resistance zone. These long ideas developed in line with our premise that any test of the 10K (or 9750) support zone is a high probability reversal location for swing trade LONGS. And so far, even in the face of seemingly ever bearish price action and patterns, our premise still holds true.

Can Bitcoin break the support and revisit 9K? ANYTHING CAN HAPPEN. We trade our premise until the market proves otherwise, and if our premise is negated in a dramatic way, (major sell off) we have stops in place to PROTECT our capital. One loss will only set our performance back by 3% which is still way ahead of being red for the year. Inexperienced investors and traders may laugh at a 10% return because they do not yet realize the weight and value of CONSISTENCY, and stability of lower risk trades. They would rather have LOTS of action, and struggle to keep any profits they randomly generate (its more entertaining, I guess).

Looking ahead, as long as price maintains itself around 10K (this includes testing 9750), we will continue to look for long setups. We prefer to align our trades with the favorable probabilities presented by the market. And when those probabilities no longer favor our strategy, we DON'T jump to a new strategy. Instead we STAND ASIDE and WAIT for probabilities to become favorable once again. In other words, this is how we CONTROL our behavior in an uncertain and highly random environment. We don't REACT to every news item, Twitter guru, or price spike, we just let the market CONFORM to our rules and position ourselves for a greater chance of a positive outcome.

9750 is the .382 retrace of the entire bullish swing originating from the 3150 low. The 9806 to 10338 area is a minor support zone relative to the recent bullish swing that began in July. Our focus is on the probability of bullish reversals off this area. Either it works out, or it doesn't. It is up to the market now, not up to us. Reacting to any bearish signal may work on occasion, but it is simply not within the scope of our rules to behave in such a way. You don't have to be in every move to generate a consistent return, and our track record reflects this.

Are you in this to donate your capital to those who can control their behavior more effectively than you? Understand the psychology that drives markets and how it expresses itself on a chart. Once you comprehend the meaning of this, you will be in a much better position to capitalize on the herd mentality rather than contribute to it.