Is Bitcoin Flirting with a Bearish Crab?

OKCOIN:BTCCNY   Bitcoin / Chinese Yuan
The rally that took place over the weekend came to a stop at the 2650CNY (400 USD) level, forming a bearish crab with a potential reversal zone (PRZ) between 2640 and 2670 CNY             .
While the possibility of yet another higher high can of course not be ruled out, the volatility seen in recent hours (as compared to the price action at the former minor S/R zone between 2430 and 2480 CNY             ) already suggests that we are in a range where the forces of supply and demand are negotiating the future direction of the Bitcoin price.

Trade Setup
Consider shorting the coin while the price is still near the potential reversal zone with a tight stop at or slightly above 2700 CNY             and a potential first target within or near the support zone (~2480 CNY             ).
Should the price indeed return to the zone marked as "Support", observe the price action and depending on the outcome, consider tightening your stop loss and/or taking a small profit and let the rest of your position run.

What to look out for
  • A bullish breakout of the current consolidation zone would invalidate the trade.
  • Should the price on the other hand turn down, observe the price action near (or in) the support zone . An impulsive breakdown of the support zone would confirm the trade.
  • Likewise a bounce off the support zone followed by a lower high (including a potential retest of the current consolidation zone), would confirm the bearish setup and might offer a low risk opportunity to enter the trade.
  • Should the price on the other hand return to the PRZ after reacting to support, consider the reversal failed and reduce or close your position.

Happy trading!
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