Reading charts, finding patterns and using prior price points is how I recognize good entries and possible targets on the upside and downside.
A Price Action Pattern Found
I expected a pullback after the whole market went parabolic in mid-December. The question was how much? The sell off a week ago was aggressive and saw 35-40% declines before a short lived rally.
The question was - is that it?
I was skeptical it was and I will show you why...
Look at this chart - I purposely left out what coin it was (though you can likely deduce). What it shows is the last time we got an aggressive up move, small pullback and then a parabolic move to the upside.
I'm talking about the move in June to July on this chart.
See Anything Familiar?
That move looks very similar to the price action of many cryptos over the past month. That is exactly what has me thinking we have a higher probability of legging down and this first sell off feeling like child's play.
The Result & Forecast
Looking at the result of the move in the chart. You see after the parabolic move we pulled back and had a bounce right at the end of June.
At which point we sold off again and gave back more than 75% of that up move that began in June.
This crypto eventually rebounded and then pushed higher, but there was some pain for anyone who bought towards the end of that move. Pain they likely could not endure and led them to sell for substantial losses.
Glancing at other Cryptos
There are many coins that look just like this chart right now. Bitcoin and Litecoin in particular.
Will they sell off that low - no one knows. All we can do is be prepared.
Are you prepared for the possibility of Bitcoin going sub 10K? How about Litecoin sub $200?
Be Prepared
You want to play out all these scenarios in your head now and make decisions on what you will do if they occur. Because from experience I can tell you, when stuff is happening in real time your emotions will flood in and your decisions will be clouded.
Let's Hope We Don't Get Too Those Prices - Come on Rally!
Learn to Invest Like The Cat
Best Regards,
Disclaimer: All content in this post is my opinion and for educational purposes.