February 15th 2021, Crypto Chartbook: Bitcoin, be a contrarian

No one likes risk, but it is necessary to manage these feelings if participating in the market. It is typical to ask the question: “How can I get in?” when prices go up. Unfortunately, that’s the wrong question to be asking. The contrarian approach is to think exits when prices go up and thinking entries when prices go down. Bitcoin, be a contrarian.

It is easier said than done since we like seeing the confirmation. We enjoy seeing prices go up and then would be willing to commit to buying. Unfortunately, it is too late to participate at that point since the risk is increasing the more prices advance. The result is that many novices trade breakout trades. This is one of the most apparent form of market participation. Since the whole world can identify such a trade, it is a low probability technique.

A real edge is created by conditioning oneself to ask the right questions at the right time. When prices retrace within a general uptrend having a clear rule set of participation is very useful. When prices go up, using a supporting exit strategy like our quad exit to take partial exits and generally asking oneself where to get out is the right behavior.

The following three charts describe the essential scenarios we see for Bitcoin to progress further.

BTC-USD, Weekly Chart, Minor dip with high risk:

BTC-USDT, weekly chart as of February 15th, 2021.

As much as a minor retracement would point for the most aggressive trend direction from a risk perspective regarding mid and long-term market participation, we see no low-risk entries to take part in. In this case, we prefer the price to penetrate 50k successfully and would like to enter on a bounce of this significant number.

BTC-USDT, Weekly Chart, Consolidation zone below US$50,000:

BTC-USDT, weekly chart as of February 15th, 2021.

The next way prices could unfold is consoliation below the larger 50k marker. We find entries on the low end of the trend rage attractive as participation by taking partial profits on the range box’s upper rim and possible continuation of the remaining position size to all time new highs.

BTC-USDT, Weekly Chart, Bitcoin-be a contrarian:

BTC-USDT, weekly chart as of February 15th, 2021.

The real contrarian opportunity would lay in a larger retracement to fade for the well-prepared trader. Bitcoins’ nature has been to show substantial retracements. A move like this would evoke emotions of doubt. Contrarian to these emotions, the larger the decline, the more aggressive an entry in position size should be.

All three scenarios require a well-prepped plan. Instead of following the market’s evolution with emotional observation, focus on the prepared battle plan and engage only if your preconceived ideas are matched by price behavior.

Bitcoin, be a contrarian

If you follow prey to your intuitive, emotional response, you will find yourself in the urge of wanting to get into the market once prices show a clear direction. This is also precisely at that spot where “fear of missing out” comes into play, another emotional trigger.

Conscious efforts have to be made to overwrite these non-quality questions from a market participation perspective. Write notes into your charts and rehearse quality-question-timing for market participation until they become second nature. A low-risk entry methodology starts with these quality questions, and doing so within a trade, is one of the best performing trading methods out there. Be a contrarian to market direction and be a contrarian to your emotions.

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