BTCUSD: Key Support Zone Reached. Where Is The Long Trigger?

23 ม.ค. 2018

BTCUSD: Price fluctuating inside a major support zone and hesitating within a minor overlapping support area. This area presents very attractive reward/risk for longs, but can it break lower?

Big difference from the vertical markets of a month earlier, but this is reality. This is more in line with how markets trade. The good news is price is within a projected support area with a lot of overlapping levels. Even though it is has not reversed up strongly, it still offers potential since the chances of a bullish reversal are generally high.

In my previous report, I wrote about the possible inside bar that was forming and the potential bullish trigger which never materialized. Price broke lower instead which brings it into a very attractive area for ME. The whole point of a trigger is to act as a filter and minimize premature entries. And that is exactly what happened here if you were disciplined enough to wait for the close of the inside bar and outcome.

Now price is doing it again. Another inside bar potentially forming, two long tails (IF the current candle closes in this configuration) and all of this is happening within the projected support zone of 10988 to 9989 which is the minor .618 support relative to the recent bullish swing. The long signal would be IF the current candle closes as an inside bar, and the high of the next candle breaks above the current candle high.

IF that scenario takes place, again it would serve as an entry for both swing and position trades long because of where this is taking place in terms of the bigger picture (large magnitude support).

The more aggressive trade is to start buying early, anticipating that the current levels will hold and probabilities will play out. This scenario is RISKIER because price has not fully reversed yet, and you are betting that it will because of the probability of its general location. And as far as risk goes, for a swing trade, the 9950s serve as the best point of reference.

Just because the general probability of reversal is high does not guarantee that it will happen. This is why if you prefer more stability and confirmation that momentum is in your favor, you WAIT for the bullish trigger. Which also means you will not get the better prices that are available now. It is a trade off and you must decide which scenario is more in line with YOUR risk tolerance.

Anything is possible and price can also retest the 9683 low and possibly lower since the support zone boundary is at 8656. IF this happens I would be looking for the failed low formation to add to my long position as well.

In summary, I am very interested in adding to my position trade at these levels. Since momentum is still bearish, I will take a slightly more conservative route and place a buy stop above the market at the 10980 level. I will not get the best price, but I don't mind giving that up in order to have momentum on my side. This helps to minimize a premature entry as well. If price spikes into the low 9Ks I will also consider adding to my position which is aggressive, but I will temper the risk by keeping my size relatively small. When markets look their worst, that is often a good time to buy which is counter to the herd mentality. The key is to do it in a way where risk is carefully considered and entry scenarios thought out and prepared for in advance and then waiting for confirmation.

Questions and comments welcome.