Mastering Trading Psychology: The Key to Success
Over the past few weeks, we've dedicated a lot of attention to market outlooks and the macroeconomy, and since there have been few changes in this area, we want to delve deeper into a piece of trading psychology in this edition of the trade letter. Many traders tend to forget that the most crucial aspect of trading is decision-making. The right decisions are made with the right mindset and trained skills.
The end of the month is near! What can we expect?
We are approaching the end of October, and thus the start of November. This means that this week is once again dominated by NFP week, a week that many traders experience as a difficult week to trade.
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Crypto Market Strength Continues but Don't Get Carried Away
Bitcoin has been holding up fairly strongly so far as it has been consolidating in an ascending price channel. While an eventual retest of the previous HTF range high ($31.5k) remains likely, for now focus should be on the daily 8EMA. Price has been retesting and finding support on the 8EMA during times of strength, and unless that relationship changes, we should lean towards more upside. $38.5k - 40k - 43k remain a likely target if we get another impulsive leg up. On the downside $31.5k - 33k looks like a good place to scale in or add to your long exposure if you are bullish based on the chart structure (which I am). Chart structure-wise there is no plausible scenario in which we dip to <$20k or even start closing daily candles <$30k and then rip up from there shortly after.
Still Inching Towards the Common Goal
Various cryptocurrencies continued to experience a notable surge in trading volume. The recent upswing in Bitcoin was supported by speculation that a Bitcoin spot ETF might be introduced before November 17th. Concurrently, Ethereum (ETH) saw an increase following reports of BlackRock submitting an application to the SEC for an Ethereum spot ETF. Two months ago, the overall cryptocurrency market capitalization was at $1 trillion; presently, it has risen to approx $1.42 trillion.
Key Levels Holding Steady
BTC Price has been consolidating mostly above the 0.382 fib retracement level and mostly holds above the 8EMA coupled with an ascending triangle type of chart structure. RSI is still above 60, which in continued uptrends points to additional strength.
Patience is a Virtue
The 8EMA remains key for me here. So far every recent close below the 8EMA was followed by a push back above it the next day. Once that is not the case anymore I will get more cautious.