Just a Little Bit Lower, Then I’m Buying

Look, it’s pretty simple: we are always the most bearish at local bottoms, and the most bullish at local tops.

“Just a little bit lower, and then I’m buying!” my driver told me while I was on my way to the shoot.

That sentence stayed with me.

It made me realize that, regardless of experience, we are all thinking the same way.

It also made me realize how mainstream trading has become. Taxi drivers are now trading Gold and Crypto between rides.

And that’s exactly the problem.

Emotions control us whether we want them to or not. The only way to separate ourselves from that emotional rollercoaster is to have a clear system that tells us when to take risk, when to reduce it, and when to stay away.

In the short term, the Cycle behavior is very clear: we are bottoming on the 1-Day and 3-Day Cycles, represented by the blue and pink lines.

Historically, that usually means the next couple of weeks are going to be bullish.

Getting into the market at the bottom of the 1-Day and 3-Day Cycles can be extremely lucrative. We simply don’t get these setups that often.

But there is a problem.

The 1-Week and 2-Week Cycles are showing almost the exact opposite picture.

One of them is about to print its first reading below 20, represented by the dark blue line that tracks the longer-term BTC trend.

At the same time, the 1-Week Cycle is about to close above 80, which is a clear sell zone.

For Cycle traders, this says one thing:

The risk is on.

This is not necessarily the moment when you want to start deploying a huge amount of capital.

The market does not bottom when the 1-Week Cycle is above 80.

And it rarely bottoms when the same support level has been tested over and over again.

We are now banging against the $63K area for the fourth time.

Master, but 3-Day bottoms are buying signals, right?

Definitely.

But 3-Day bottoms during bear markets can be cunning.

They are often accompanied by a liquidation event. In other words, the market makes it look like it is about to fall much further.

Take a look at the previous months.

Both times, the 3-Day Cycle bottom took roughly a week to form.

That prolonged the 1-Day Cycle and created a bunch of red candles, one after another, for an entire week, making sure that as many bulls as possible were fully capitulated.

But there was one important difference.

Both of those times, the 1-Week Cycle was clearly falling, indicating that Bitcoin’s longer-term trend was bearish.

The situation is very different when the 1-Week Cycle is rising.

In those situations, we can simply dip into the 3-Day lows and then continue higher.

Bitcoin dropped 24% and 38%, respectively, before those previous 3-Day Cycle lows.

Right now?

Bitcoin has dropped just 4% from the local highs on August 8.

The positive thing is that the 1-Week Cycle is still going up.

But at the same time...

It’s approaching 80.

Feels risky. Is there anything better than Bitcoin right now?