Short Term Update: Sometimes simplicity is the answer

BTCUSD Daily Chart and 50% retracement support

After a strong rise from $27,000 to $42,000 I think it is time for a break, in these situations sometimes the simplest approach is the valid one. The most obvious support is the 50% of the range at around 34,800$.

The closest dynamic support are the deviation bands of the kama average on the 4 hour timeframe.

I’m not saying that BTCUSD will go there, it could be an opportunity to buy if this scenario materializes. Don’t forget that when the market is fast you can lower the timeframe to find better support areas, as you can see in the above chart KAMA deviation bands worked well during the sell-off down to 27,000$ last January 4. Under these circumstances the daily chart is too slow to adapt.

You often ask me when to enter a trend already started, usually it is never too late to buy the important thing is to place a stop that is beyond the deviation bands that I use, to stay safe from volatility. Let’s see an example on the daily chart.

BTCUSD Daily Chart with kama average and an ideal dynamic stoploss – KAMA parameters that i use are included.

You can buy at any moment a well established trend but keep in mind that the right stoploss to use is wide, not tight because Bitcoin volatility is high.
If you don’t like KAMA average and the way i compute bands you can give a try to Keltner Channels.
Personally i prefer the approach of Mr.Kaufman but the choice is yours.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s