Bitcoin and $20,000
A subscriber just asked me what I thought about what would happen when Bitcoin reached $20,000 on the price chart.  It's a good question that deserves a wider answer.

My thought on this is similar to what we've seen in gold whenever the metal reaches some multiple of $100.  The price acts like a magnet both up and down, but especially up and for the first time.  In other words, with every $100 up move in gold resistance will form simply because of the psychological effect of hitting that next milestone.

It has no technical basis but rather is a purely psychological thing that may or may not have significance to the bulk of traders.  So, as Bitcoin pushes towards $20,000 tonight expect it to run into some resistance.  But understand that it shouldn't be your signal to sell unless that is your personal goal.

Then, if it is, you should sell to alleviate stress, take your profits and enjoy your Sunday. 

But, if you think it could go higher, then it is imperative that you simply keep your discipline and watch the chart for a significant reversal signal.

The most reliable reversal signal is the one-bar reversal. This is where the price closes below the low of the previous bar.  Now I say that, and then there's Bitcoin.

Note the black arrow on the current weekly chart (each bar is a week's worth of trading).  It's clear that the only red bar (meaning the price went down) closed below the low of the previous green bar (price went up).  

This is a textbook one-bar reversal.  

Now look at the next bar.  It closes above the high of the previous down bar.

This is also a text book one-bar reversal.

Back-to-back reversals like this are incredibly powerful signals and look at what the price did after that....from $5000 to just shy of $20000 in five weeks.

This is a powerful bull market.  Possibly the most powerful bull market in the history of this planet.  So, my advice is, if you are looking for a short-term scalp, to watch the 4-hour bar for a one-bar or two-bar reversal.  

Sell a tranche (1/4 to 1/3 of your trading position) and immediately set a buy-in point 20% below that price. If the 4-hour reversal turns into a daily reversal signal (same rules, just look at a daily chart, not a 4-hour one), then your odds of getting that 20% lower price is possible.  

I don't think $20,000 will be much of an event, but markets like this are tricky.  And you have to be nimble.  You have to be comfortable that if you sell and the price whipsaws back higher without you that you convert Bitcoin into some other cryptocurrency or token that is lagging behind and move on.

Good luck and keep your stick on the ice.


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By becoming a patron, you'll instantly unlock access to 546 exclusive posts
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