Monday, 2 September 2013

BTC Update Monday 2nd September

I'm going to kick off today's post with an apology for dropping out of contact over the last 72 hours.  It turns out that a first exposure to Australian flu is not for the faint hearted...

What I am not going to apologise for is the fact the bitcoin market never dropped back into our designated buy zone, at $125, before surging North again.  This is trading, I'm afraid and we've had a great run of sound entries.  In hindsight, the last 'wholesale' buying opportunity this most recent move presented was at $118 and we caught that one nicely.

Anyway, this is how it looks on a chart:

As you can see, the market has accelerated out of its measured trading channel and entered a more exuberant phase still.  How long this will continue remains to be seen.  On the one hand bitcoin's short history testifies to the fact that when this baby decides to 'pop' the size of the moves that result can be (relatively) enormous.  It is possible that we are entering such a phase right now.

BUT at the outset we must force ourselves to recognise that, in a general sense, exuberance - or perhaps more accurately over exuberance - is almost always followed by a correction, as we saw earlier this year.

The key point from a trading perspective is to appreciate that our list of unknowns is growing. We cannot, for example. be sure if the current upside acceleration is the prelude to a truly explosive move or a correction.  And when the list of unknowns grows a cautious trader battens down the hatches.  This can either mean tightening loss stops or liquidating positions entirely.

I want to be clear that where bitcoin is concerned I have absolutely no intention of liquidating my investment holdings; the fundamentals for this market remain stronger than any I have traded.  But, those speculative positions (beyond my investment holding) require closer attention and this case I have decided to let everything run, with a loss stop tightened up to $120.

I hope this rationale makes sense. Please don't hesitate to fire any questions back down the bearing...

Rob @ BitScan