Crypto Chartbook - Bitcoin, Buy The News

Summary

• Professionals know that news releases can turn the direction of a market. Consequently, these can be entry or exit points.
• With news, volatility is typically increasing, and a larger volume of transactions is at play.
• We also got a hedge rotational “buy signal” for bitcoin versus gold on the weekly chart as gold holders might switch to bitcoin for the next foreseeable timeframe.
• Overall, the goal in mind is to “erase” intuitive responses and an execution time delay leading to sub-par entry timing.

peshkov/iStock via Getty Images

“Buy the rumor, sell the news” was a term used among traders in the last century. Back then, it was profitable if applied to purchasing stock three weeks before earnings release news. A much more powerful principle is a valuable edge derived from this saying. Professionals know that news releases can turn the direction of a market. Consequently, these can be entry or exit points. While amateurs wait for a news release and are victims of their debating process of interpreting the news data, professionals only use the news release as a timing tool for their preplanned trade execution.

With news, volatility is typically increasing, and a larger volume of transactions is at play. For amateurs, data evaluation in a turmoiled market environment generally results in procrastination of execution, meaning no trading or chasing trades. Professionals find necessary liquidity to exit a trade or use volatility to fade moves on less risk for entries.

Last week’s invasion of Ukraine was no different. Only those prepared with a plan were able to position themselves in Bitcoin (BTC-USD).

Bitcoin, daily chart, the giveaway:

Crypto markets, daily charts as of February 28th, 2022. (Midas Touch Consulting and TheStandard.io)

A giveaway was a widespread larger supply zone throughout the crypto sector (green horizontal lines on the daily charts above), and preset buy entries in the crypto space were getting triggered. Inter-market relationships stack the odds of placing a successful trade.

Bitcoin, weekly chart, entry target zone within reach:

Bitcoin, weekly chart as of February 28th, 2022. (Midas Touch Consulting and TheStandard.io)

With our entry target range nearly reached (see our previous chartbook release), we were ready to act, knowing a possible larger time frame tuning point was a possibility.

You might argue that the price has not penetrated the entry zone. Still, at a closer look, you will identify that due to exuberant volume on the surprise news day, the supply zone values had changed to provide significant support right at the rim of our initially planned zone. Charts need to be consistently updated to stay accurate!

Bitcoin/Gold-Ratio, weekly chart, another edge stacked:

Bitcoin versus Gold in USD, weekly chart as of March 1st, 2022. (Midas Touch Consulting and TheStandard.io)

Precisely on the day in question, we also got a hedge rotational “buy signal” for bitcoin versus gold (XAUUSD:CUR) and the SPDR Gold Trust ETF (GLD) on the weekly chart. Consequently, this signal provided another inter-market relationship edge that supported our decision-making for aggressive entry. What we can see on the chart above that compares bitcoin with gold is that since institutional money has become a massive part of bitcoin holdings, these more significant funds rotate their money in and out between gold and Bitcoin as well as the Grayscale Bitcoin Trust (OTC:GBTC).

Following the yellow line, one can see prices being high to buy bitcoin with gold at double top, and acquiring bitcoin at a double bottom is a way to take advantage of cheaper bitcoin prices in relationship to gold. For us, a good reason to assume that gold holders might switch to bitcoin for the next foreseeable timeframe, to hedge their wealth preservation portfolios.

Bitcoin, daily chart, profits booked and room to go:

Bitcoin, weekly chart as of March 1st, 2022. (Midas Touch Consulting and TheStandard.io)

The weekly chart above shows four more reloads within the last five days. All trades have been risking mitigated with our quad exit strategy. Consequently, the remaining position was market money at no risk to us. We posted daily calls to prepare interested parties for possible re-entries. Prices have already advanced by nearly 30% from the lows.

This preparedness and merely following rules allow ending up being positioned and not dependent on whether a turning point matures. Even in a negative outcome, profits have been made. With a bit of luck, these remainder positions can go a long way and provide substantial additional profits. In addition, one is positioned early before a trend is even established.

Bitcoin, buy the news:

We must confront opinion-forming debates led by ego (the need to be right). We use reconditioning behavior to achieve the best results. The goal in mind is to “erase” intuitive responses and an execution time delay leading to sub-par entry timing. Consequently, consistent extracting of profits from the market is possible.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BTC-USD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Comments

[Paul Woodford]

I also use as my baseline chart the weekly candle chart, and I overlay the 5, 10, and 30-week moving averages against it. It’s now showing what I believe technicians call a golden cross, where the 5-week MA is just now crossing above the 10-week MA in an upward direction. Still quite a ways to go before 5-week crosses above the 30-week MA. It’s a bullish signal, I believe.

It’s been developing for the last month or so. Although BTC bottomed about 5 weeks ago, the ‘screaming buy’ point for me was roughly 2 weeks ago when you could see the 5-week MA bottom out and slightly turn upwards. The golden cross now confirms my bullish stance with more conviction vs. the spot price bottom 5 weeks ago, because it was possible then for further drop in price. I did buy a little more back then around $34.5k, but the absolute low point was ~$32k. I feel more confident here buying on any 1-2% point dips. Always dollar cost average!!

Finally, I’m not a technical analyst nor a professional investor by any means but I do find looking at charts helpful to questioning my gut instincts. I have some difficulty following the author’s article above, perhaps it could include some more “plain english” explanations of what he’s trying to state for us in the non-technician crowd.

[reron]

The big Ruble conversion was Monday right? Right before the currency collapsed. That's the kind of news you can believe in.

[17144952]

Thank you for reminding us you are a professional and therefore know better than us amateurs when is the right time to buy. Most of us are not professionals. That’s why we subscribed to you. A more timely update on your thesis once it changed and you “jumped” would have been nice. Cheers.