How to Buy the Dips and Bollinger Bands

Good Morning fellow Cryptionians,

In this post I will cover how I buy the dips, which might help some of you as well as the current chart analysis.

First of all we are at present piercing through the top of the symmetrical triangle again at the $37,170 x BTC USD. This is visible in the attached chart POINT 1, if we can create an hourly candle above it, it is a great sign of a continuation on the upside, which seems to happening right now as I complete writing this post.

In the chart you can also notice the uptrend from the low [POINT 2], and how the latest selloff rebounced from a major line of support at $35,400.

Now for those of you that are learning about how to read the charts. You can see that when the Bollinger bands becomes squeezed, than there is a lot of movement in a certain direction. See points “B” in the chart.

The Bollinger Bands are driven by volatility, and the Squeeze is a pure reflection of that volatility. When Bollinger Bands are far apart, volatility is high. When they are close together, it is low. This squeeze indicate normally that a big move will happen soon. Often that move is in the direction of the candles closing below the Bollinger bands. As in the “B” points.

 Another indication of breakout direction is the way the bands move on expansion. When a powerful trend is born, the resulting explosive volatility increase is often so great that the lower band will turn downward in an upside break, or the upper band will turn higher in a downside breakout. As also seen in the “B” points.

You can see this happening at the time of the post on the upside. Which could indicate a big move up is coming soon.

So please have a look if you day trade, at these patterns as they are very helpful in defining a trend and capturing big moves in both directions. This can save you funds when the market moves against you and make you great profit if entering at the right time.

HOW I BUY DIPS WITH A HIGHER LEVEL OF SAFETY AND PROFITS

Sometimes buying the dip can be disadvantageous, as you buy a dip, only to find that after a false upside movement it moves lower. Then you buy another dip, only to find that there is a greater dip the following day, etc… This in a way, on a dollar cost leverage level, is still great, as you are averaging your entry points, so don’t be to disheartened if this happens to you. You are buying the same asset at lower cost!

One safer way to buy the dip is not to ASSUME where the bottom is.

I don’t chase my losses, by buying the dips at lower levels, what I do is I wait for the market to confirm that it has reached a bottom, and when the chart tells me that we are resuming the uptrend then I buy that dip on the upside direction. This helps me not compounding my losses, but compounds my probability of a win. I might not profit from all the lower level but my entry has a higher level of success.

This is visually explained in CHART 2 (hand written paper) which explains how most traders (we all have been there) have tight stop losses and because of the fear of missing out (FOMO) they get out of the market at a lower point and then re-enter often times at higher levels, only to be bashed down by another dip [See mini graphics 1 in chart 2].

The strategy which I find to be safer is to wait for a confirmation of the uptrend and then buying in, this stops you from getting smashed by different dips going in the opposite direction.

I hope this helps.

Take care, have an awesome weekend.

Much Light

Paolo T.