Observe market changes and re-formulate plans

I started planning for a weekly rise on 9/8 , and it went well at first. However, the United States released the price index on the evening of 9/13, and concerns about inflation were still there. BTC fell nearly 13% in a single day, and the US stock SPX fell nearly 3% in a single day. The US dollar The index is back to its recent highs (110).

I previously sold long positions on a weekly basis, but later I judged that the price had risen too sharply, so I sold them in two batches (since we are still in a bear market, I will be more conservative about long positions and usually sell them actively. If it is a bull market, like this operation will miss many opportunities).

When I sold it, I wanted to wait until the market cooled down before taking it back, because at that time, my judgment on the weekly line was still bullish. But then there was a big drop on 9/13, and I tried to buy low as planned. But after the market calmed down a bit, my analysis came to a bearish conclusion, so I canceled the weekly rise plan and bought low. The positions were later sold at a small loss.

Market status

Let’s first sort out the trends of BTC on various time scales:

• monthly line down
• Weekly line confirmed
• The daily line is confirmed, but it is bearish, because the increase since 9/7 has dropped by 70+% (within 38.2% is considered bullish, 50% is neutral, and above 61.8% is considered bearish)

As can be seen from the picture above : the red downward pressure line has been confirmed three times, and the last two times even overlapped with the weekly 12EMA, which shows that the pressure from the weekly moving average is very obvious.

On the daily line, we can see that the rise since September 7th has been very fierce, and no support has been established during this period. Therefore, when the market falls sharply, there is no resistance to quickly fall back to the starting point.

Here I want to review a basic concept. To establish an upward price trend, we need: Low, High, Higher Low, and Higher High:

The price behavior since 9/7 has only been L and H, and no HL has appeared yet, so it cannot be said that an upward trend has been formed. This is the main reason why I gave up the weekly upward plan: there must first be a daily upward trend before there can be an upward trend. Weekly uptrend.

Of course, you can say that it is possible to form HL in the past two days, but judging from the magnitude of the decline, the chance is slim. The only hope for the bulls here is that there are buying orders below $20,000. However, from the price behavior of BTC itself, to the stock market, to the changes in the US dollar index, all we have seen so far are unfavorable factors.

I would like to remind you that in the modern trading market, technical analysis cannot only look at a single asset because there are programmed transactions. Many funds are now traded through programs. These programs will look at the price linkage between different assets. For example: BTC has been obviously negatively correlated with DXY for more than a year, so when DXY rises, you will see BTC was sold inexplicably. In addition, I have observed many times that the five-minute line of the US stock SPX has risen sharply, and BTC has also risen in less than five minutes. I think these are the results of programmed trading.

Therefore, some BTC fundamentalists will shout loudly: Bitcoin "should not" rise and fall with the stock market, but the reality is that it "will" rise and fall with the stock market. Maybe one day these linkages will disappear or even be reversed, but that hasn't happened yet.

Therefore, we have to pay attention to US stocks :

The trend of US stocks is actually the same as that of BTC (to be precise, BTC is the same as US stocks): the monthly line is downward, the weekly line is unclear, and the daily line is unclear. In addition, concerns about inflation are still there. If the Federal Reserve raises interest rates in September or even all the way to the end of the year, it is unlikely that the stock market will bottom here. The reason why the stock market rose last week was because of the advance plan of "cooling inflation and cutting interest rates on the US dollar." But now it seems that the price was wrong.

The U.S. dollar is undoubtedly on an upward trend :

The monthly, weekly, and daily lines are all in an upward trend. From 9/12 to 13, it once fell below the previous daily low. However, as soon as the CPI price index came out, it immediately rebounded strongly. Looking back, unless 9/21 The Japanese FOMC interest rate decision can be lower than three yards, otherwise there will be no opportunity for the dollar to weaken.

My operation plan

observe.

I understand that reward comes from risk, but professional traders should choose to participate in situations that are beneficial to them. After the sharp decline on 9/13, the short-term favorable situation is: if the price rebounds, find the high point of 4H or 1D and go short.

However, my own short-selling trading record is not good, and BTC has been in a bear market for more than nine months. I think the risk-reward ratio of short-selling here is no longer high. Therefore, I choose to observe and observe where the market will reverse. After the reversal, I will buy and go long.

I often made a mistake in the past: thinking that the market had "dropped enough" after a sharp drop, and would even use RSI to strengthen my confidence. Then increase the price all the way down until you can't bear it and give up selling. Then magically, the low appears soon, and the market quickly reverses upward.

Now I would say:

• After the price enters a downward trend, it is impossible to guess in advance how long it can continue this trend.
• The RSI in a downtrend is useless at all. The RSI can be as low as 20 or even 10, and then the price hovers for a while, only for the RSI to recover and then continue to fall.
• Only when the RSI on multiple time scales reaches the selling timeout at the same time will the market be prone to buying (because experts and program traders are looking at the combination of these conditions). Therefore, the most ideal overselling at present is to oversell on the weekly, daily, 4H, 1H, or even 15min and 5min RSI at the same time. However, the daily RSI is still above 40, which is still far from overselling.

So if I am unsure about the market outlook, I will lower the spot ratio. How low should I lower it? Everyone has different standards. Some people are only willing to keep 30% of the total funds, while others choose 50%. Some even say that Bitcoins are only collected and not sold, so they choose 100%.

I generally think about it this way: keep 70% during the bull market (the risk in the bull market is to miss the price increase, so I choose to keep more positions in spot), and keep 50% at other times regardless of the bear market or uncertainty.

A little emotion

Trading has been relatively difficult this year, especially for stock market traders, because in the past ten years, the stock market has basically been rising every year. If you buy wrong at the beginning of the year, most of the gains will come back by the end of the year. However, this year is a relatively rare year of decline. You have to do the opposite of what you did in previous years to make money easily: don't buy easily unless there is a clear bottom, but you have to be aggressive when selling, and run after it rises for a week or two.

In Taiwan, I was very impressed. Last year everyone was talking about TSMC (2330). Young people talked about it the most, and they heard about stock deposits the most. I always thought that it was because the stock market rose due to the money printing by central banks of various countries. For more than ten years, stock deposits have only seemed reasonable. Now the consequences of money printing, inflation, have emerged. The central bank has been forced to tighten currency. The stock market has immediately entered a downward trend. Who knows how long it will last? Take a look at the Japanese stock market :

Thirty-two years have passed since the economic bubble burst in 1990, and the market has not even returned to its starting point. Think about the young people who started "saving stocks" in the 1990s. They must be in their fifties and sixties this year. I don't know what they have saved...

Ah, are you talking about cryptocurrency? We in the currency circle will only smile contemptuously when we see the Nikkei stock price chart. This chart is considered healthy in our currency circle. Anyone who can still breathe after wearing a respirator is considered healthy. Just take a look at it. First file for your reference:

EOS, known as the killer of Ethereum at the time, was said to have fast block speeds, faster transaction speeds, and how convenient it is to develop smart programs on it. However, after more than three years, it is obvious that the target price has returned to zero.

In fact, in the currency circle, few people really know the value of what they buy. I started to know about Bitcoin in 2017 (it’s quite late, I know). I studied it carefully in 2019 and found the white paper written by Satoshi Nakamoto. If you read it carefully, you still only have a vague understanding of the concept of decentralization and roughly what problems you want to solve. When I read Lyn Alden’s article A Look at the Lightning Network in 2022 this year, I was still surprised that I could learn a lot of in-depth knowledge. Concept, the most basic BTC has such a steep learning curve, let alone the advanced Ethereum and thousands of cryptocurrency projects.

I rarely talk about fundamentals now. For trading, I just look at price action and use technical analysis. But with the recent changes in the world situation, please allow me to say a few more fundamentals. In this era of strong US dollar, many national currencies have reached the critical point of history. The Japanese government, which has unlimited quantitative easing, cannot help but intervene. The yen has depreciated, and we seem to have reached the end of the big debt cycle. I don’t know when the credit of the US dollar will go bankrupt, but I know that the situation of currencies other than the US dollar will only become more and more difficult.

In the past era of globalization, as long as major countries held a summit together, they would usually compromise and come up with a solution. Whether it was the Bretton Woods Agreement after World War II, the US dollar abandoning the gold standard in 1970, or the IMF's intervention during the Asian financial crisis in 1997, Finally, with the 2008 global financial crisis, central banks around the world entered the era of money printing, and there was no going back.

During the epidemic that began in 2020, central banks increased their efforts to print money. Money finally flowed from the investment market into the real economy, and inflation came. From many perspectives, from countries to companies to individuals, we have already eaten up most of our capital, and what will follow will be an era of bankruptcy: the central bank cannot increase its efforts to print money because of inflation, and it cannot truly tighten money. , because the fiscal deficits of various countries are extremely high, raising interest rates means an increase in the interest paid on bonds. In an era of low economic growth, it is increasingly difficult for companies and even countries to pay interest.

Conflicts between major powers are on the rise, globalization is disintegrating, and humans are using "conflict" instead of "negotiation" to solve problems, and we all know that conflict can only create new problems.

Many people will say that in this era, "capital preservation" is more important than making money, but what kind of capital do you want to protect? The U.S. dollar, the global reserve currency, has reached the end of its debt cycle. How can you and I preserve our capital?

Modern currency cannot protect capital. Scholars have invented a very magical theory called Modern Monetary Theory (MMT). It is a genius assumption that the economy will grow forever, so currency can continue to be printed as long as there is market demand. . They forget that there is only one earth and its resources are limited, and we are still far away from colonizing other planets. The government is happy to accept MMT, because it is none of my business to leave debts to future generations.

And I just want to remind the world of this obviously unreasonable fact.

To protect your capital, you must first understand that "things are rare and valuable". Real estate is limited, so you can protect your capital. There is a cap on how much new gold can be mined each year so that capital is guaranteed. As long as the network can operate, Bitcoin can maintain its capital.

Although these things can maintain capital, the price will fluctuate under the open market. Real estate prices can be cut in half, gold prices will also rise and fall, Bitcoin... you know. Capital preservation means that the great wheel of time moves forward and changes chapters. Only when you see the real chapter will you know who can preserve capital. Only then will the value of these things emerge.

I used to talk about these concepts more often, but as the situation changes, it is becoming more and more dangerous to talk about these concepts. Governments talk plausibly about "regulating" cryptocurrencies, but say nothing about the global currency crisis: Last year, the Federal Reserve kept Emphasizing that inflation is only transitory, this year the Federal Reserve will tell people to tighten their belts to fight inflation. Please, everyone with a discerning eye knows that the Federal Reserve is lagging behind reality. Next year it will say that the economic recession is serious and will be sharp. Cut interest rates.

The fact is that monetary policy has been out of touch with reality for a long time. It has been since 2008. In Taiwan, the government told me that inflation is 2% - 3%. The fact is that this year alone, food prices have increased by at least 5%, and oil prices must have increased by more than 10%. , business people are more aware that many raw material costs are rising by 10% - 30%.

The facts are clear: officials and academics are out of touch with reality.

In some places it is dangerous to talk about this, and in other places you can talk about it, but usually you will just get a pair of blank stares. I am just a common man. I just want to take care of my family. Since you read my article, just listen to it and think about it. Thank you for your support.