Three Reasons Bitcoin Bulls Are Holding False Hope.

Bitcoin longs have increased over the weekend with the price pullback in Bitcoin. This shows bulls are still hopeful.

Bollinger Bands

As we look at the Bollinger Bands, we can see a potential mean reversion buy signal as prices are hovering in this range.

Yet, if we compare the Bollinger Band in the daily and the 12-hour time frame, it gives us a perspective that the potential for another bullish pump from here is less likely because the quality of the mean reversion signal is not as powerful on the 4-hour time frame.

MACD

Another signal that is giving the bulls some false hope is the bullish divergence on the 4-hour MACD indicator.

This bullish divergence is not strong enough to overcome the bearish cross on the higher time frames.

Ichimoku Cloud

Again, we are getting a slightly bullish signal on the short time frames with this pullback at the signals it created in the indicators.

Yet, the longer-term perspective from the weekly and daily indicator is much more powerful, and I do believe prices will be plummeting.

This Decline May Be DRAMATIC

With the number of longs that we have in the market for Bitcoin, I do believe there will be a substantial decline that will go beyond the cash market pressures.

Some statistics demonstrate that derivative trading accounts for nearly 80% of all cryptocurrency trading at this point. Our chart is showing that we have an enormous number of longs trapped in their positions at a loss.

Should prices begin to plummet from here, those long positions have to sell to close their losing positions.

They'll be selling into a bearish market that is already cascading with panic selling. This will cause more liquidations and an extreme move that is far beyond what the typical reversal indicator would be correct in calling the signal.

In other words, as we crash down, I believe that we'll get a bullish signal screaming on many of the short time frame indicators.

In normal markets, a screaming indicator signal would be ideal to take action on, but in this moment, I think that it's time to ignore those and keep your stop losses far back from the market to let the market have a lot of room to drop and then retrace and then drop again.

The great danger right now would be to try to trade within this chop.

If we can successfully get even a small position at this time,

• we can sit on that and let the chop happen,

• anticipate that it will happen,

• and wait for the time that it does happen

so that we can place our next add-on trade correctly.

I'll talk more about that in future posts.

Altcoins Bounce Back From The Depths

Hundreds of altcoins dropped 20% and more over the weekend. From those extreme lows, we've seen many rebound a great deal in the past 24 hours.

The Alt Season Co-pilot spreadsheet shows the change of pressure in the market, yet it also reveals that we have not moved back into neutral status. In other words, the bounce back was not enough to go back to a neutral price trend. We have crossed an important barrier into the continuation of the bear trend and we do not see any indication of a bottom.

Our trading system moved us into cash in the middle of May and we are maintaining that status for now as we monitor these coins.

Crypto will not crash forever; there will be a bottom and there are some phenomenal projects that will make insane gains again. Knowing what we know from past cryptocurrency waves, we can maintain our preparedness.

The first thing to do while we hold our cash is to research all of the past data from the AltSeason Copilot so that we can get prepared to capitalize on the coins that have performed best over the past recent history.

Stay tuned as we crunch the data.

New Member on the DCT Writing Team!

I’ll create a welcome post for Indestments, a old friend and experienced TA student/teacher, as well as find out how to create an author bio page for him!

In the meantime check out

• Are Staking Services in Regulators Crosshairs?

• and Are Altcoins in Low-Risk Entry Territory?

Trading Losses

I always want to make the most amount of money while I'm trading, and it seems logical that I should have a larger position if I want to make larger amounts of money.

Yet time and again, I have been proven that putting on a large trade at the beginning of a move is actually what causes most of my losses. I've written about my biggest trading mistake in the past, and I recently had another example of why this trading mistake is so lethal to your long-term success.

Recently, I was watching for Bitcoin prices to top out and drop down. Every time Bitcoin prices came to the top of the range, I was getting into a short position and putting my stop loss just below my entry. Six different times the price broke nicely, and I had a profitable position with my stop in place to protect my trade. However, six different times the market came back up and kicked out my stop loss, and then ranged around at that same price level. Each time, I was able to put my short position back on and get my stop back in place.

For six weeks, I battled the market to get my position in place every time the price came back up to test the top of that range. Over and over again, I put the position on and successfully managed my risk, except for the last time.

Because I was certain that the market had topped out and was going to go down, I had a large position on. Because my position was large, I had to keep my stop close in order to keep my risk low.

But in fact, this is not keeping my risk low;
this is only keeping my dollar exposure low.

If I had put on a smaller trade and left a larger stop loss in place, I could have weathered the chop in the price movement and I would have had a position in place for the big move that I was expecting.

Once the big moves have started, this is the time that I could safely have added on to my position. But instead, I was kicked out of my short position at a small loss, and then the market made the big move without me.

Now that the market has made the big move, it is beyond my trading signal and the risk of getting into the position now is much larger.

I'm writing this journal post and recording this members video as a note for my future self.

Because many times, I've made the mistake of being too large on my initial entry, and while I have the knowledge that this is an error in risk management, I still haven't effectively changed my behavior and turned this knowledge into education.

Some part of my subconscious still needs retraining to get a larger perspective and a more patient approach to setting positions in the market.

New Respect For Turtle Traders

It's also a personal battle to release the urge to do big trading. Putting on too large of a position at the start of a trade, one of the two mistakes all traders make.

There is a time for big, for high leverage.

This is after you already have a profitable position in place and the trend is continuing.

Another time to use high leverage is to hedge a cash position. In other words, if I have a million dollars' worth of Bitcoin, I could take $10,000 and go 50x short while still holding my cash Bitcoin, and I would hedge my cash position with my futures position.

More to come!

Trade safe and keep those losses small.