BTCUSD: Next Leg Higher Can Break 8500.

2 août 2018

BTCUSD update: This market has retraced into an attractive support area. As price action stabilizes, it can be setting up for the next leg higher. This is the location where a breakout offers much more potential compared to a break of a high.

At S.C., we have been tracking this retrace carefully. We have also issued and adjusted swing trade orders in markets like ETH and LTC which also have a lot of potential if this next bullish leg unfolds.

The 7450 area happens to be the .382 retrace of the current bullish structure. If the recent strength is going to stay intact, this level will have to be maintained. Reversal candles off this level will provide the validation we need to justify risk on the swing trade and position trade time frames.

IF the next leg higher unfolds, a target of the 8500 area is within reason. In theory, price should push to a higher high if it is going to keep the integrity of the bullish structure. The low 9Ks would be a more aggressive expectation, but since this market is in recovery mode, giving it a chance to reach further is in line with best practices. IF the market manages to reach these levels, they will be a place to lock in profits, not initiate new positions.

If price falls apart, which it can, the next support area is around the 7K whole number. A retrace to these levels or below will change the nature of the current price structure from bullish to more of a range bound context over the near term.

In summary, waiting for price location and setups to align is a process based on patience. Not reacting to news, rumors and other conspiracy theories is the first step. Also following simple best practices such as buying near support levels in markets that have proven to be strong also helps.

This market is poised to go higher, but there is no guarantee. Being able to recognize and factor in risk is a key trait of a successful market timer. Just like patience, you do not need to be an expert to consider risk. It begins with asking questions like: What happens if my trade goes the wrong way? How far is within reason in terms of market structure? How far is too far? And if it goes this far, how much capital loss is acceptable? These questions should be answered BEFORE you enter the trade.

As S.C. we are anticipating a move higher, but we always consider the risks no matter how attractive the setup. This is how we determine if an idea is more appropriate for a swing or position trade and what sizing strategy to use.

No matter what, we know that the market is always right. Our job is to listen and adjust to new information as it becomes available. Having an open mind and being flexible are what help you align your decisions with the probabilities of what its next move.