Disclaimer: The information in this blog represents the opinions of its author and is for educational purposes only. It is not intended as investment advice. The bitcoin market is extremely risky so you should only invest money you are willing to lose.
We reported in this blog just 2 days ago that a tsunami of cash in the form of institutional money was headed for the bitcoin market. The news broke today that the CME, which trades more than 16 million derivative contracts daily, plans to launch a bitcoin futures contract.
The CME news caused bitcoin to rocket past the previous high of $6299, set just 2 days ago, to a new all-time high of $6420. Prior to this dramatic price surge, bitcoin had been making predictable Fibonacci-wave pattern advances to new highs precisely every 8 days - on Oct. 13th ($5869), Oct. 21st ($6189) and Oct. 29th ($6298). So it was a nice surprise when bitcoin made yet another new high just 2 days later at $6420 on Halloween.
Ignore The Trend at Your Peril...
The chart below, from our October 29th post, shows that we have consistently recommended entering long positions at low-risk entry points during the long uptrend that has remained intact since the low of $2975 on Sept. 15th. If you choose to trade against the long term trend, you do so at your peril.
The Price Swings Get Wilder
As the rate of new highs accelerates, the price swings get wilder, so it takes more and more discipline to stay calm and trust the math, which is the smart way to trade.
The chart below shows the relatively low-risk, high-probability strategy of trading off a 38.2% Fibonacci bounce in a strong uptrend, a trade we recommended. Watch how the trades get trickier as the price swings accelerate in speed, depth, and time.
Deep Retracement Strategy
In the next chart, which we originally published on Oct. 25th, the post-gold-fork market had put in a deep retracement, beyond the 62.8%, and we recommended a cautious entry strategy, waiting for a higher high above the 50% retracement of $5645.
This turned out to be a great call, as bitcoin advanced over the next 4 days to 2 higher highs, first $6299 on Oct. 29th, then $6420 on Oct. 31st.
Next Entry Point?
Each new high will be accompanied by a retracement, and finding the right entry point requires discipline and calm while everyone else is panicking. Stay calm and trust the math to pinpoint a retracement level for a low-risk entry point.
The Chart below shows the likely retracement levels after the new high of $6420 which bitcoin tagged today. If it bounces off the 38.2% level at $6020 and starts rising, that's a good time to jump in. After a retracement of 50% or greater, however, we would wait for the market to put in a higher low and a higher high above a major support level. Recall that $5774, the 61.8% retracement of this rally, is the same as the 38.2% retracement of the previous rally, so it should offer major support. Extreme caution is warranted below this level.
How high could it go? Nobody can predict that. The accelerating rate of new highs and today's astonishing price level of $6420 warrant an upward revision of our price projection based on the Fibonacci math. The chart below shows a major Fibonacci target of $8543. Strap yourself in for a wild ride.