Duking it Out: Black vs White Swan
A long, prolonged battle with a surprise at the end.
Saturday night was eventful as I was lucky enough to identify — a Black Swan harmonic on the 15min and a White Swan on the 5min, right after a major upward thrust that reset most of the fundamental oscillators.
These bursts are great for finding a possible entry post-reaction and as a prototypical day trader I’m looking for quick — and profitable — points of pivot that can be used to trade against after a larger-than-normal movement in price action.
And on most weekends where volume is low, a 200-300 point jump is usually enough to get things moving:
I figured that they’d probably fight it out with the bearish Black Swan taking the win in the end — so I entered the trade.
I entered a short @ $42,708 after a confirmed re-test of the selling climax and made note of it in Trading View:
Then, the White Swan kicked in precisely on-target and caused a little anxiety as it closed the gap between my entry point:
If I was a bit more prepared I could have traded that bounce with a quick snipe / scalp on a long order but I didn’t put one in. For my stop loss on this trade I put it just north of the wick on the selling climax candle which you can see was $42,775.
I put a SL for $42,799 so if it broke that local high I’d be out a few bucks but if it didn’t I’d still be in the trade, ready for a slow — or quick — fade back into profit.
Of course, bitcoin quickly tested my resolve (that was a pretty effective bullish White Swan!) and as it crossed my entry point I quickly spot-checked a few indicators to see if it was likely that we’d hit my stop loss.
I always start with the fundamentals, like volume:
But this was an effective nothing-burger as there wasn’t any sign of a major push in volume to warrant this as a sustained climb up. I felt pretty good at this point but I decided to take a look at a few of my other favorites, like Ichi Clouds and a review of volatility bands against moving averages:
There was some room on the 1min for a continuation but by the time I grabbed a screenshot it was already dipping. Same for a check on vol:
Finally, since we had a local top created with that push to the upside it presented another opportunity to identify any new and/or updated harmonic pattern and a Nen Star showed up on the 1min confirming my suspicion and the continuation downward continued as expected, not breaking the wick high and not hitting my SL, at least at this point in time.
But, I had enough confidence to actually add a bit more to my bags and ladder-in a bit more for greater upside. Eventually, I’d put the stop loss lower so that I could maintain an exit in-profit, regardless of outcome.
A few minutes later we were back in-profit:
It was time to start thinking about profits and where to find exits; a quick trend-based fib gave me some levels to target:
Also, a possible cypher on the 15min gave me some confluence for a target of $42,300 — I decided that that would be a good place to start and I put a Take Profits order.
4 hours later we got close to crossing a local low, bounced right above it and then my hope was that it would continue to proceed downward, breaking $42,562 and then hit my targets closer to $42,300 for profit! We we’re getting pretty close.
The next level would be deep but could be quickly raided with low volume and low buying interest — I was feeling pretty confident at this point and it was getting late and a little past my bedtime (I try to get to bed before 9:00pm).
As it got way past my bedtime bitcoin closed in on the low, blew through it, and then bounced again @ $42,422.5. A check on the volume didn’t seem too out of range for a serious bounce and so I decided to leave my orders in and head to bed.
My hope was to wake up with a decently-sized capture of profit!
I woke up to being stopped out based on a serious bounce and then bitcoin, later that day, went all the way down to $41,725.5 — ouch! So disrespectful!
The entire trade cost me quite a bit of effort for very little upside but I appreciated the exercise of working through a handful of harmonic patterns and fundamentals.
Sometimes luck is on your side for the direction and exit zones and sometimes it doesn’t! I’m not fond of leaving trades overnight or while I sleep so it was a risky move to not monitor this closely until the close.
Now, if this was an opportunity that was during my more normal, waking hours I would have (hopefully) pulled out sooner with a bit more profit. No worries as the market — and opportunity — will be there tomorrow.
To infinity and bitcoin.