After sitting right below the $10,000 level for almost the entire trade session yesterday, Bitcoin finally broke through, and it really didn’t look back.

Your’s truly here stayed up late last night to observe the price action on what happened with Bitcoin at the break of 10k. I like to observe these kinds of levels on any instrument. The closest thing I can compare it to, in recent history, is when I was trading the ES (S&P Futures) and NQ (Nasdaq Futures) overnight session during the US Presidential election last November. Take a look at this 15-minute chart, specifically the highlighted box area.

At around 1915 CST, Bitcoin traded at and above $10,000. What is interesting is that there was no massive profit taking, no massive buying. Nothing really out of the ordinary, then we had a ramp up of volume and price until 2330 CST. That’s the first red candlestick on your screen. Price opened at $10774 and close at $10928.47. However, look at the wicks on that candlestick. Price went as high as $10928.47 where it was rejected and went as low as$10276.27.

The next candlestick in the highlighted box is that monstrously huge bearish candlestick made up of almost entirely selling volume. Price opened at $10696.99 and just capitulated to as low as $10700 and closing just above at $10110.5.

The next candlestick, large bullish candle, is very representative of what we have come to expect with Bitcoin’s behavior over the entirety of the year. Any large dip in price has been bought. Price action traders may even call this a ‘tweezer bottom’ because of the length of the bottom wicks.

 

It is currently 0812 CST and as I was writing this after action report of Bitcoin, it has continued its massive run. We have gone from $10964 to $11501 over the last 30 minutes. Astounding!

How do you trade this?

I trade for a living. When you trade for a living, you are already in a considerably risky position compared to other approaches to making money in the market. Professional investors really don’t distinguish the risk behavior of a trader who trades off of daily or weekly periods versus a day trader who trades on lower than 1-hour charts.

But as a private trader, there are limits to my own risk. Participating in these kinds of levels and in this kind of psychological euphoria is something that I, personally, don’t touch. Some other traders love this kind of action and are proficient at it!

If you are a new trader, you are going to experience a great many whipsaws. Your stops are going to get hit. If you are constantly watching your position while this is going on, you can easily get into the ‘gamblers’ mindset by constantly entering to try and recover losses that are compounded by your constant re-entries.

Sometimes the best way to trade days like this is to just watch. Let everyone else battle it out and lose money. There is no shame sitting on the sidelines and joining the winning side later. Trading is about survival after all. It’s not a sport, it’s not an ego builder. It’s not about winning or losing. It’s about surviving. The market is not a place to find or input a sense of honor. Just sit back, relax and wait for things to slow down before you re-enter.