Don’t trade non-trending markets

Good morning fellow Cryptonians. 

I wanted to give you an update on the BTC/USD chart and overall market.

After trading for nearly 2 decades, you start looking for certain patterns and try to find ways to capitalize on the moves the market is giving you with little or no bias. This is what this post is about. As most of you if not all of you know, a market can move in 3 directions: the market can go up, the market can go down, and the market can go sideways. No brainer right?

This is very basic I know, but most individuals keep their position open hoping that the market will move in their direction without really looking at what the chart is telling them. They don’t take profits when the market is high, and don’t put stop losses when the market is at risk of moving down. This is fine if your strategy is buy, hold and forget. If you are trading monthly, weekly or daily, then this strategy might not work in your favor. There is an opportunity to make money in all markets conditions and reduce not only your losses if the market goes in the opposite direction of your trade, but also to make a profit.

So let’s have a look at the charts….

We have been going up between March 2020 and 14^th April 2021.

We have been going down from the 15^th of April to the 19^th of May and since then we have moved in range (sideways), between the high $40K USD and mainly the $33K level. In the last 13 days we have moved up 5 times and down 8, as shown in the attached chart. Many are so dishearten and beaten up, that have thrown in the towel and sold their positions, only to buy later at a higher price and feel more disappointed. Some are not looking at the charts any more, as it just a reminder of the pain.

Following the trend is a must, not only the mega daily and weekly time frames trends, but also the smaller time scale trends.

On the daily chart we are forming an uptrend (so far) on both the candles on the chart [1] and the RSI [2]. But this does not confirm that we are back in bull territory, but rather that the market is still range bound.

I will not consider this a bull market until we are above and finish above $48K and are above the 100 and 200 moving averages.

If we move below the $33K trend line represented by the black line, we are likely to head down to retest the $30K USD level. So keep this in mind.

As mentioned in previous posts, in my opinion we are still in “No Man” lands. I am still bullish long term, but I will not sugar coat this, there are good cases for both the price of BTC and alt coins to move up and resuming the bull trend, as well as moving lower, and confirming an earlier than expected bear market. This could be a temporary drop to the next major liquidity pools (where stop losses are) around the $29K and $28K USD. If we look at the Wyckoff “composite man” chart template this could even reach the $26k mark. However there are a lot of buy orders seating at around $30K as my fellow crypto investor Sam Macdonald pointed out, so even if we reach that level it looks like we might spring back up and then move up to retest the higher resistance levels.

So how do we take advantage of this BEAR or BULL Hybrid Market?

I can’t tell you what you do with your crypto or funds as this would mean I am providing financial advice, (which I am not), but I can share what I have been doing. I have been looking for major support and resistance levels and when for example yesterday night Bitcoin confirmed the rejection of the support at the $33,500 USD level I bought some of the coins that I knew would go up (as they are the darlings of the market right now) like MATIC, ADA and ENJ.

I bought Matic at $1.56 when bitcoin was around $33,800USD, and sold it at $1.90 when BTC failed to overcome the resistance of $36,500. Based on my experience there was a good chance of the market moving lower. This helps me in taking advantage of these swings. I showcased these swings in the dark chart as white crisscross lines. Some of the indicators I use are the RSI (I look for a divergence – RSI Trending up while the retest goes lower) and on the MAC I look for volume moving into green.

In the darker chart I have highlighted some of these supports and resistances levels. Which sit around $40.2K, $38.5K, $34.7K and 33K.

If you decide to trade and it’s new to you, trade with the smaller amount possible, build the muscle until you find a consistent trading system that works for you time and time again. It’s not about winning every trade, but about winning more then you lose. The casino has only a 2.65% winning chance (European roulette) over the players, yet casinos make billions. Why? Because they are not looking for a big win, but for CONSISTENT wins over time, no matter the conditions. The casino knows that if there are 100 plays or a thousand plays they will still win 2.65% of the time. Making money trading is not about making heaps of money in a few trades, but making consistent profits on a regular basis. Greed and Fear rule the game and that’s why 95% of all traders lose money. So if you are consistently losing, stop, reassess and get a test account.

 Find what works for you, use a test account with virtual money and if you feel you are ready test it with small amount first, then scale up. If you don’t want to trade, than just buy and hold.

Also, some users have asked about my portfolio. So I will add it here… It changes based on market conditions, but normally it’s divided into 4 buckets/sections. One bucket has stable coins like USDT which I can use to buy these swings (20%), or dips, another bucket has big cap coins (18%), and another has medium cap coins and smaller coins (60%), and the last bucket I hold has very speculative coins (2%).

Some of these coins are staked and the interest compounded each term. My strategy changes completely once I believe we are at the end of the 4 year cycle. Then I sell all and stake my profits as USDT or similar, to build my cash account for the next cycle. After all, everything in crypto is about timing.

This has worked for me. Find what works for you, we all have different styles of investing and different risk adversity profiles.

I hope this helps, trade safely

Much Light

Paolo Tiberi