This morning, traders were awoken to the sight of Bitcoin smashing through piles of buy stops to reach my first major target at $5,000 with a $1,000 surge in just a few hours.
Yes, that’s right – I have been long BTC for several weeks and if you read my previous blog of 31 March, you will know that VIP Traders Club members have been well positioned for this move. And we had a target at the $5,000 level that was hit at 6:20 am. Traders who had resting sell orders at that level were filled for a very large profit.
But the immediate reaction of the cryptopundits was astonishment. They were deep in total puzzlement as to what prompted this explosion. Here is one I spotted on www.ethereumworldnews:
Save for a few soothsayers, this move caught many traders with their pants down. In fact, crypto Youtuber Sunny Decree recently joked that he recently made the “worst trade since [he] got on Youtube”, as he shorted $4,200. The fact is, there wasn’t a clear fundamental catalyst that drove this move. Sure, fundamentals for the ecosystem have recently been booming, with there being continual macro factors, institutional announcements, and technical developments that have been an underlying boon for the industry. But, many are sure that Tuesday’s move, which brought BTC from $4,150 to $4,650 — a move of ~14% — was a result of pure technicals.
I liked that opening stanza! I guess I was one of the ‘few soothsayers’. But this author suffers from the near-universal belief that it is the news/catalyst that drives markets. Bullish news produces rallies and bearish news the reverse. I have consistently disproved this theory, but they still cling to it like limpets to the hull of their doomed ship!
And the final throw-away that the move was the result of pure technicals is pure hilarious. My friend, all market moves are technical. They are the result of buyers and sellers coming together and agreeing a price. A massive buy order if met with few sellers will obviously produce a large rise in price.
And when buy stops are hit, the action is like a Chinese fire-cracker that cannot be stopped until the balance of buy and sell orders comes into equality. This latest surge, unprompted by any discernible outside news/event is surely another prime clue that it is the markets that make the news, not vice versa.
So how come I managed for predict this move to $5,000 weeks before the event? It was purely and simply the application of my Tramline Trading method – and my reading of the likely state of market sentiment (bearish).
If you did not catch this move, then you are not a member of my VIP Traders Club. Apply here for your two week Free Trial.
I hit a six with BAT !
For my PRO SHARES members, I have been trading British American Tobacco shares – a company that has fallen on hard times in recent weeks. Yes, smoking tobacco has become a no-no and around the world, smoking in an enclosed public space has become illegal. So why would anyone in their right mind buy these pariah shares?
Actually, any trader who possesses a true contrarian mindset, that’s who.
So with a solid bear trend and sentiment on the floor, I naturally had to look for a low risk spot to buy! Here is the long term chart I posed to members in late January
There are several notable features. First is the textbook purple five-wave pattern in red wave 5. Second is the final wave 5 of 5 also rose into a momentum divergence, indicating a classic buying climax at the £56 high. Third is the decline to a precise hit on the Fibonacci 76% support level. Fourth is the clear five-wave Elliott pattern to the decline
That was the highly promising position in late January – and my ducks were lining up in a row for a contrarian buy trade. Here is a close-up of the big decline on the daily
Lo and behold, I have a textbook tramline pair where the line drawn between the highs of waves 2 and 4 creates the upper tramline and the parallel line underneath conveniently connects the lows of waves 1 and 3. So now with those tramlines firmly in place, the market has descended in wave 5 right to this lower tramline. This is looking very pretty.
And note the huge momentum divergence this fifth wave has opened up! Look at the bounces off the waves 1 and 3 lows – they were both preceded by decent momentum divergences. If history is any guide – and it usually is in technical analysis – we can expect a similar bounce here but much stronger than before due to the size of the current divergence.
And this is what I advised Pro Shares members: If this is correct, I expect a vigorous rally phase to start soon with the gap as my first target in the £32 area. Buy at the current £24 with a Protective Stop at £22.
And this is the updated picture
Bingo! Target hit at £32. That is an £8 gain (33%) in just over a month.
Members now have one very useful option here to either take profits or not.
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