• Henk ter Linde

Escaping the channel ?

As I do this quick write up of the price development of BTC, it seems to making an effort to escape a long term channel it has been in for little over a month now.

I have to admit that the force of the move up caught me by surprise. I have started loading up shorts from 9200 and I honestly did not expect it to challenge the top of the channel. I will keep adding to my shorts (low leverage, small position) because I am very doubtful we will break 10K. Especially if you look at Stochastic and RSI levels.

However, if we break out of the channel with conviction, I might consider being wise and taking a small loss instead of making the beginner's mistake of piling up on a losing position.

Channels are nice but horizontal lines are nicer. So let's look at my beloved 12h chart to see what we can possibly learn from that.

I should slap myself, because I always said that the 12h Stochastic is not an indicator you should be trading against, and I am doing just that. So I will probably be punished for violating my own principle and BTC will shoot up to 9600-ish, as indicated by the red line.

I have to admit that nowadays the only time I really look at the charts in detail is when I write these articles. In fact, having a position in BTC is a rarity these days. I think I have made my feelings about the legitimacy of this market clear.

If we look at the 3D chart I also used last time, you can see we (barely) reached the first target. We are now getting a (nice) bounce off that area but I still expect it to fall to the bottom of the range as discussed many times.

I should not make predictions like that, but hey ho; why not live a little, right?

The Stochastic and RSI are low/middle so if I was to make the opposite argument, it seems like there is enough elasticity in the price left to make a run for the top of this trading range. The weekly sees a more logical pattern in Stochastic and RSI for a drop to the low 7s. That only goes to show that no indicator can provide any certainty.

I have always said that I expect legacy markets to turn down at some point but that does not seem to be the case. I mean, just look at TSLA... That is basically two parabolic rises in a row.

Don't get me wrong, I like TSLA and I think it is a good company but is this natural or do we see another phenomenon at play? I do not have an answer, but I would be careful with too much exuberance about the economy. Q3 is generally regarded by economist at the quarter that will make or break the recovery. It is also the quarter in which aid packages will end and if the situation in the US won't improve or the EU gets a resurgence of their COVID first wave (coz understand that even if it goes up from here, that is still only the first wave!), I simply don't see how this can be sustainable.

So, as always: trade safe and make sure to only risk funds you are comfortable losing.

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