I use technical analysis quite a lot, as well as fundamentals, and emotional intelligence to try and navigate my way through this market. I believe that due to recent events the market has shifted to a more emotionally interpreted perspective. This has encouraged me to shift my decision-making towards interpreting human behavior, rather than other metrics. It is difficult to explain or unravel one’s approach to the market in one single blog post. It’s a puzzle and I have mentioned numerous ideas, strategies, and viewpoints that all fit into one another at some point. Readers often gravitate towards one or two points and then go on to completely misinterpret my thesis. Furthermore, things I have mentioned in previous posts are imperative to understanding my approach and viewpoint.
Can Charts Lie?
Well, no matter how you wish to interpret the charts you have to agree on one thing and that is that charts are a record of past behavior. Charts are in essence a record of human behavior and because people are creatures of habit and rather predictable we base future predictions on past behavior. In essence, this is exactly what is taking place when traders and investors utilize charting to plan their trades and investments. So, no charts don’t lie but they only communicate the past. This is not nearly as powerful as we would like it to be but it’s the truth. Psychologically, investors will be drawn to the bargains on offer in the market. Most will find it difficult to resist. I am choosing to resist at this point, as I am interpreting human behavior and expect this emotional response to continue in the market prior to reality setting in. In reality, this market only shifts bullish above $40K. Any move up now, I am interpreting as a “long trade” in a downtrend. That is exactly why I am choosing to trade and lay off accumulation.
Why Not Now?
When BTC was trading in the mid 30K to $40K zone things looked a lot healthier. You don’t buy something because it’s cheap or oversold but rather because of confluence. In other words, other factors combined with the fact that it is cheap or oversold provide sufficient confluence to step in confidently. Currently, the fact that the market is oversold is to me an isolated event in a bearish backdrop. It’s just not sufficient enough for me. That being said, it can go up but at the current moment, I would be violating my own “rules” to open new long positions. As mentioned, I am approximately 60% in the market. It would be foolish and irresponsible to increase that based on a single indicator.
Come hell or high water, I am waiting for more data and confirmations from the market before I increase my exposure. I am not a gambler.