Who doesn't love a Bottom?
Double entendre intended, LOL!
Sorry....what I am meaning is a bottom in Bitcoin. I was chatting with @raserrano today and he gave me a heads up that Bitcoin was falling and I was wondering how do people know when a bottom is put in? When is it safe to enter a trade hoping to profit from a move up? We all know what catching a falling knife means- entering a long position when price hasn't finished moving lower only to get stopped out.
I use a concept called the "rounded retest" to give me confidence that a price bottom has been reached. After price has reached a known support (or resistance) level, look for price to return to an order block, pivot point, or support level on a lower time frame. So today, price hit a known support level shown by the green line:
So now that a support level is reached, dig down into a lower time frame and look for an order block (a down candle prior to an up move) that gets respected. I found this one (blue box) on the 15min time frame:
You can see that price doesn't break through and gets respected 2 times before moving up. These would be ideal entry points.
In summary, you don't have to guess when a bottom is gonna be in nor do you need to catch a falling knife. Use the "Rounded Retest" method (rounded because that's what price action looks like) for confident entries- let the market tip its hand and let you know when it will turn in your favor.
Knowing when and how to get it in are only part of the story. Over leveraging, improper trade size, stop placement, and bad psychology are a different story and, if I'm being honest, is what I struggle with as I recently discovered and shared with @raserrano as I my account got liquidated on the last BTC down move.
I refunded the account and am trying something different: a more disciplined approach and different thinking. I no longer have an expectation around how much money needs to be made on the trade but rather have a price target of where price needs to go before I exit the trade. I'm also OK with being wrong and am willing to assign a dollar value for how much wrong I'm willing to be.
How wrong are you willing to be before you get out of a trade?
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Great job, I'm do happy that you made this post. I'm hoping to get on a trade today as it is pay day and it will be the perfect moment to get myself more STEEM and maybe some other long term tokens.
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