I like to call Bitcoin's latest movement the Volcano. I've been noticing a lot of rule-of-three patterns in the price action market. Three upticks and three corrections seems to be quite common.
Rather than looking at price during a volatile time like this, I always like to look at time. Time is much more reliable than price is when the bulls and bears are fighting ruthlessly.
We can see that pressure builds slowly and consistently for the first half of the Volcano. Each iteration, the pressure builds stronger than the previous wave. Each wave takes a more distinct parabolic shape before plateauing out for a couple days until the next parabolic movement begins.
After the third move up, the Volcano top blows, and lava violently rushes down the mountain. Whereas pressure builds slowly and volatility is less, the blast is violent and starts out volatile while calming down on the third wave. You'll notice we haven't had a third swing down yet, I think we'll be heading down in price over the next 2 or 3 days.
Altcoins are weak and panicking. In three days, altcoins might be more oversold than they will ever be for a very long time. Bitcoin spiked and not a lot of altcoins followed. Now that Bitcoin is crashing weak hands from the alts are selling out of fear. Fundamentals haven't changed. This is a possible buying opportunity.
I jumped the gun, just like I always do, and sold a tiny bit of Bitcoin for USD at $11200. It took a full 24 hours to cap out at $12000. I should have trusted my own advice. I rarely do.
We can see in the first 24 hours of the eruption there was massive opportunity to make day trades. This is obvious when the crash is so violent that you "know" it's going to pop back up in the very short term. These flash crashes happen all within the same 6 hour candlestick.
I find that 6 hour sticks are very useful for swing trading, but quite useless for day trading. Perhaps I should DL some custom software that lets me see the information in between what traditional exchanges offer.
In any case, I won't be buying back in on a price point. All my future day and swing trading will be based on volatility and time. I'll be waiting at least 2 more days before I get back in.
Even if you're wrong 40% of the time you can still make a lot of money on average trading the markets. The important thing is to keep a level head and not go on tilt. FOMO and FUD have manipulated me time and time again in these markets. It's time to get serious.
The best way to start trading the smart way is to risk the biggest amount of money you can while still not being emotionally attached to it. This could be $10000 or it could be $10. Pick a number too high and you'll go on tilt. Pick a number too low and you won't take the exercise seriously... and that's exactly what it is: a mental exercise in self discipline. Considering the circumstances we find ourselves in we should all make an attempt to surf these waves rather than let them crash over us.
