The beauty of trading is that when prices are correcting, there’s news of doom all around. All the bears come out of hibernation, forecasting a crash, and the bulls hide in a corner.
The exact opposite happens when price reaches lifetime highs. This creates fear in the minds of the traders who miss buying at the lows and selling at the highs. Therefore, we focus on the price action to forecast the next possible move. Now that Bitcoin is close to its highs, what should we do?BTC/USD
Traders who went long at lower levels on our recommendations have been booking profits near resistances. We are left with about 30 - 35 percent of our original position, which we had planned to book at $5000. Should we book out close to the highs, or wait for higher levels?
Yesterday, the cryptocurrency reached a high of $4932.9, very close to our target levels. However, selling at the highs has pushed Bitcoin back below the $4800 levels. As the digital currency is trading above $4680, chances are that it will again attempt to breakout to new highs soon.
If the bulls are successful in sustaining above $5000, the cryptocurrency is likely to gain momentum, and it will indicate the start of a new uptrend. Therefore, we recommend holding the existing position with a stop loss of $4500.
We don’t want to keep a deeper stop loss because, usually, when bulls fail to breakout of a strong overhead resistance, bears sell aggressively, sending prices lower. So, if the bulls fail to breakout and sustain above $5000, we can expect the bears to push the cryptocurrency down to at least $4184.6 levels, which is the 38.2 percent Fibonacci retracement level of the pullback from $2974 to $4932.9.ETH/USD
Traders who went long at $317 with a stop loss of $278 on our recommendation had to face a loss. In hindsight, it looks like we purchased at the highs of the range and sold off at the lows of the range.
However, we had intended to buy on a br...