PA Basics
This should be the basics of price action (PA) trading. Market Structure.
I want to make sure every single one of you understand clearly what I'm talking about. Make sure you master this.
HH = Higher High
LH = Lower High
HL = Higher Low
LL = Lower Low
The idea is that a succession of HH and HL defines a bullish market structure. In this case, every higher low is a dip to buy. Hence the famous "BTFD - Buy The Fucking Dip" during a bull market.
A succession of LH and LL defines a bearish market structure. In this case, every lower high is a bounce to short.
Unfortunately, people are confusing lower lows during a down trend with lower highs in an uptrend, and call them "dips" too and buy them. Don't do that. Lower Highs are for shorting, and if you've shorted 11k+ with me a few days ago you should have saved a fair amount of money (or even made some, depending on your exposure).
Here is an illustration of Market Structure since December 2020 + 4h ema200.
Market structure on the daily is very powerful, but it can be also confusing during periods of "chop" (aka: no clear trend) like we had this summer. In such cases, you can be flat, long or short, look for context. For example: this summer, BTC Dominance chart looked very favorable for alts, so I kept shorting BTC while being long af on alts in case of a BTC nuke. The nuke didn't come, no problem, I made money with alts.
Market structure won't give you the exact top and bottom, but it will let you catch large chunks of a trend. This is ideally what you want in your trading, catch large moves with a high hit rate, and give back as few as possible when it turns bearish. It's totally fine not to catch tops and bottoms, you're a money maker, not a clout chaser.
Market structure in combination with strong trend indicators such as 4h ema200 can really help you a lot with your bias but more importantly with your portfolio and money management. Follow the rules below.
Bullish market structure => hold mostly BTC, buy dips on BTC, long alts vs USDT if BTC.D (BTC dominance) looks good for alts.
Bearish market structure => hold mostly USDT, short the bounces on both BTC and alts.
Market structure choppy => hold a mix of cash and USDT and look for context (see note about last summer in the post above).
BTC bullish + BTC.D going down = alt season, I don't mind going 80%+ portfolio in alts. Rare events though.
BTC bearish and BTC.D going up = exit all crypto markets / short every bounce (sadly if the FED doesn't print a new stimulus very soon I'm afraid we might be close to this).