BTCUSD Perspective And Levels: 12K Around The Corner?

3 déc. 2017

BTCUSD update: This market is poised to push 12k after consolidating for about a half day, as the bullish momentum continues. Price is still within a potential reversal zone, but NOT enough of a reason to short.

In my previous report, I wrote about the built in long bias coupled with the freedom from institutions. No one knows what is going to happen when the futures start trading, even the experts who set up new futures contracts have no idea. The sentiment of the crowd appears to view institutional involvement as a whole new wave of large buyers that will drive the market dramatically higher, but do not realize institutions trade in more complex ways. I believe this new level of complexity will facilitate a more balanced market which is not the most beneficial for short term retail traders.

Before I get into the TA, think about this for a moment: A fund manager has a responsibility to his investors and wants to show a positive return, BUT that is not the only way fund managers get paid. They also charge management fees which are not performance based, but instead are incentivized by how much capital is under management. Wealthy investors invest more into instruments that are stable, and that show a consistent return over time. They invest less in wildly fluctuating markets like this. Futures and options can be used to create more stable performance which will attract more capital, which results in higher management fees. My point is this: This market will become a thick slow grind market, similar to the S&P 500 or EURUSD. It will offer opportunity as always, it just won't be as generous and easy as it is now.

As of now, price is sitting in the middle of the reversal zone and still no signs of weakness which means both long and shorts are high risk at these levels. In terms of risk/reward, shorts would make more sense, BUT with no signal and no confirmation, there is no evidence based reason to be short. What to look for is reversal candles or patterns around or just under the 12k level, or a break below 10722 which is the .382 of the recent bullish swing.

Until a bearish pattern appears, and until supports break, this market can continue higher. How high? If it breaks beyond the 12100, the next target extension is 12400 which is measured from the 7871 low. This is based on the structure that is in place at the moment.

In summary, as short term traders, the BEST we can do is embrace what the market is telling us, whether we personally agree with it or not. I believe this market is in a bubble and will correct harshly once the fake tether situation unwinds, but that is an opinion that the market could care less about. I do not act on my opinions, I act on technical facts. Sure I want to be long as it goes higher, but I am not willing to take the risk at these levels. Even retraces are tough because they are so shallow relative to how far a fast this market has come along. So when I face so much conflict, I stay flat until the market presents an opportunity that is in line with my trading plan. It is my plan that keeps me out of trouble, and minimizes any impulse stimulated by these fast moving prices. When you are in this business for a long time, you learn that capital preservation is actually more important than capital gain. This is why I seek consistency rather than lottery tickets. If you cannot trade with any consistency, in time the profit you have now will be donated back to the market.

Comments and questions welcome.