How do we set targets for swing trades during the bull run?
Beginning with the June highs around 14k, bitcoin started making lower highs and lower lows, the definition of a downtrend, which culminated in an inverse head and shoulders that formed over the month of December.
Education**: A H&S is considered a reversal pattern because the right shoulder forms a lower high (or higher low in an inverse H&S) than the head and the pattern completes upon the breaking of the neckline as this guarantees a lower low (or higher high) and thus reverses the trend.
This pattern completed, what I consider to be, the bottom of the downtrend we experienced over the second half of 2019. And with all the talk of a bull-run leading up to the halving in May 2020, the stage and sentiment were set to go up. Since then, bitcoin has been on a fantastic run, blasting through the previous trendline down, testing it briefly, and making higher highs with hardly any real lows.
So how do we form target levels for swing trades during the bull run? We set targets using previous areas of trading congestion and pivot/reversal points.
(Disclaimer: the safest way to make money during a bull-run is to hold and wait for a clear topping pattern, and this is my recommendation for beginning traders looking to get into the crypto game. This is also where a majority of my capital is held currently; as a strong hand long just enjoying the ride!)
As the bull-run began, the first obvious target was 8500. This line had provided resistance and support on the previous bull cycle last Spring, and was tested as resistance on several occasions during the Fall downtrend. And naturally, Bitcoin rallied to about 8450 before settling into a minor congestion zone between 8000 and 8300. (this will serve as future support)
The next target was 9000. This roughly coincided with the 200-day SMA (key support/resistance for algorithmic technical traders), and was also the rough value that marked the base of the descending triangle that formed from the June highs until the ugly breakdown on September 24th. This value had served as support for that triangle for several months and was sure to turn away an initial bull advance at least once. The ultimate top was around 9185 about a week ago before retreating as low as 8250 and finding support at the congestion formed after the first swing high to 8450.
Now bitcoin has broken, $9000 and the 200-day MA on high volume (and on lower time frames even retested that level) and as I write this, bitcoin is building a base around 9300. My expectation is that we will soon test the next congestion zone between 9900 and 10500. This is a wide zone and that can be frustrating but remember that no single number is magic, we just have to look for areas where lots of coins traded hands as these create new targets for traders moving forwards (and targets create reversals and support/resistance levels that define buy and sell targets).
I have a personal limit around 9900 (I play conservatively) and will buy again on the pull back that should form afterwards. I would be shocked if bitcoin blasted through 10000 without any resistance, but hey, it's bitcoin, it's wild, and anything can happen.
Education**: A H&S is considered a reversal pattern because the right shoulder forms a lower high (or higher low in an inverse H&S) than the head and the pattern completes upon the breaking of the neckline as this guarantees a lower low (or higher high) and thus reverses the trend.
This pattern completed, what I consider to be, the bottom of the downtrend we experienced over the second half of 2019. And with all the talk of a bull-run leading up to the halving in May 2020, the stage and sentiment were set to go up. Since then, bitcoin has been on a fantastic run, blasting through the previous trendline down, testing it briefly, and making higher highs with hardly any real lows.
So how do we form target levels for swing trades during the bull run? We set targets using previous areas of trading congestion and pivot/reversal points.
(Disclaimer: the safest way to make money during a bull-run is to hold and wait for a clear topping pattern, and this is my recommendation for beginning traders looking to get into the crypto game. This is also where a majority of my capital is held currently; as a strong hand long just enjoying the ride!)
As the bull-run began, the first obvious target was 8500. This line had provided resistance and support on the previous bull cycle last Spring, and was tested as resistance on several occasions during the Fall downtrend. And naturally, Bitcoin rallied to about 8450 before settling into a minor congestion zone between 8000 and 8300. (this will serve as future support)
The next target was 9000. This roughly coincided with the 200-day SMA (key support/resistance for algorithmic technical traders), and was also the rough value that marked the base of the descending triangle that formed from the June highs until the ugly breakdown on September 24th. This value had served as support for that triangle for several months and was sure to turn away an initial bull advance at least once. The ultimate top was around 9185 about a week ago before retreating as low as 8250 and finding support at the congestion formed after the first swing high to 8450.
Now bitcoin has broken, $9000 and the 200-day MA on high volume (and on lower time frames even retested that level) and as I write this, bitcoin is building a base around 9300. My expectation is that we will soon test the next congestion zone between 9900 and 10500. This is a wide zone and that can be frustrating but remember that no single number is magic, we just have to look for areas where lots of coins traded hands as these create new targets for traders moving forwards (and targets create reversals and support/resistance levels that define buy and sell targets).
I have a personal limit around 9900 (I play conservatively) and will buy again on the pull back that should form afterwards. I would be shocked if bitcoin blasted through 10000 without any resistance, but hey, it's bitcoin, it's wild, and anything can happen.