Surely many have heard the statement that you need to trade with the trend. And in all books about trading this statement is written on the first pages.
This is true and we repeatedly tell you that now you need to trade only long, and not short, since our medium-term trend is upward.
In general, shorting is a tool for professionals with low risk and profit. Since the price, in theory, can fall by a maximum of -99%, but the price increase is not limited by anything.
📖How to determine a trend?
First, you need to determine at least the medium-term trend on the weekly timeframe.
In our case, the Bitcoin price chart makes higher highs and lower lows. Therefore, the medium-term trend is upward.
Then you can switch to a smaller time frame, for example, daily. And there build a local trend channel to understand the short-term trend. And as you can see, we are also inside the ascending channel for a short time.
But the lower the timeframe, the lower the effectiveness of trending ones. Therefore, on the daily timeframe, trend channels almost always have channel medians, which are plotted based on the anomalous shadows of the candles.
We are generally silent about hourly timeframes and do not recommend using them for trading. There is too much unnecessary noise on hourly timeframes, which will greatly negatively affect your trading results.
❓ Why are we even talking about this?
As you remember, we said earlier that the price will sooner or later come to the test of $30,000, where those who have not bought Bitcoin should buy. As you can see, there is not much room for growth left to the upper boundary of the medium-term ascending channel, but there is more than enough space to the lower boundary. This means that the risk of profit from buying Bitcoin at current prices is very low. And it’s better to wait a few months and buy at a good discount than to sit in a drawdown in the future. Moreover, the lower boundary of the medium-term ascending channel is now right around $30,000
Moreover, if you look at the local trend, you should worry and close positions only after this channel breaks down. Currently it is approximately $35,250 per 1 BTC. Therefore, while we are inside a local ascending channel, there is no need to rush to close positions.
It’s better to simply average and buy additional positions, rather than give in to panic, since even in the most unfavorable scenario, Bitcoin will only fall by -16-20% from its current levels. The alts will certainly suffer more, but most of them are too cheap and the strong drawdown is simply explained by low liquidity.
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