Bitcoin 30K: Play The Breakout?

Bitcoin is on the verge of a consolidation break out into the 30Ks, but what is the most effective way to manage the risk presented in this scenario? Price location plays a very important role in shaping trade expectations. Let me explain.

You will notice a path that I have illustrated on the chart. Like I explained a few weeks earlier, this is NOT an absolute forecast, instead it is one possibility out of infinite possibilities. It is NOT about WHEN the market will follow this path, it is about IF it chooses to do so. We are followers in this HIGHLY RANDOM game and the only ability we have is to manage risk.

Here are the factors to consider:

1. The broader price structure continues to support the bullish argument.

2. Price has been consolidating between 26,500 and 29K for weeks.

3. Bitcoin appears to be less correlated to the broader markets in recent weeks.

4. All it needs is a catalyst to set it off and shorts will be forced to cover.

So the bullish break out is favored statistically, the problem is: the LOCATION is FAR from ideal and presents a much higher risk in terms of my swing trade strategy.

Even my newly setup trade scanner has been calling longs in the high 27K area which offered potential profits of a couple of hundred points IF managed carefully. The key to this is using the market context to SHAPE expectations in a way that optimizes RISK.

The way I go about doing this is simple: If I am seeing buy signals in a bullish context that are NOT aligned with a major support, then I have much LOWER expectations of the outcome. This translates into 1) focusing on smaller time frame strategies. 2) Looking to take profits as soon as risk is justified. 3) Time horizon expectations are limited to 1 day or less.

This mind set allows me to participate in scenarios that have a lower probability of following through.

So where is the ideal price for a swing trade with greater probability and reward/risk potential? 25K (see blue square on chart).

Otherwise, watch for a break of the 29,500 area and momentum follow through into the low 30Ks during the week. Also be prepared for a fake out and conflicting signal.

This is NOT a game of opinions, it is a game of adjusting to NEW information as the market presents it.

Thank you for considering my analysis and perspective. Happy holidays to everyone.