DoctorBitcoin
Short

Bitcoin Daily Downtrend is holding. Another leg down is likely.

OKCOIN:BTCCNY   Bitcoin / Chinese Yuan
1065 11 10
We are inside a clear downtrend channel in the Daily RSI . As long as it holds the most likely scenario is price going down. First to retest the 1500 CNY             area and then 1300 CNY             area. This should play in the next days/few weeks.

Shorting from 1700 CNY             area gives a 4:1 risk/reward ratio to 1300 CNY             area with a stop loss if channes breaks above 1800 CNY             are. So that's a massive profit and a very likely scenario while bitcoin looks very weak.

Bitcoin Fundamentals remain in bad situation, plus Bitstamp was recently hacked. That means less fiat incoming from new adopters for a while, plus really bad press for bitcoin .

It is now being published in all mass media as the "Worst Currency Performance in 2014" so it won't help either.

Finally Litecoin is crashing at the moment, making lower lows. That means some of litecoiners cashing out to bitcoin and then to fiat.

Good luck!
If price goes below current low at 1500 CNY ($255), that would mean breaking the 3 year uptrend support in the logarithmic chart and entering into a new big downtrend channel.

So, going down further if first leg to 1300 CNY plays out, is very likely if nothing changes in the fundamentals. 1000-850 CNY ($160-$135) area could be a mid term target.

Regards!

snapshot
+1 Reply
Nice analysis! Agree with your points.
+1 Reply
Thanks for the analysis again. I think the 4:1 reward is a bit deceptive though, as it assume chances are equal of the price reaching the stop and the price going straight down to be caught at 1300. Many things can happen on that way down, and if it only ever goes as low as 1350, you'd just be caught by your stop. I think it would be wiser to short towards a nearer support first, and then reevaluate from there.
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DoctorBitcoin JeroenHouttuin
4:1 means I only need to be right 20% of the time to be breakeven (Not equal chances). And I think chances of this trade happening are way bigger than that, so it is an amazing trade overall.

A major exchange got hacked, bitcoin fundamentals looks really bad, downtrend RSI daily is playing out and we are at resistance level, and finally there is a lot of resistance in the 1800 CNY level.

There are no other big supports below 1500 CNY, only 1300's CNY. If dump below 1500CNY happens I expect a lot of panic momentum, so it will be hard to stop easily.
Of course I always like to watchout in case momentum don't kicks after the break, but that would be strange, as investors who felt safe for 1 year that bought below $250 would be now a big risk.

I could be wrong, but seems a good risk/reward for me :)

Thanks for your opinion!
Reply
JeroenHouttuin DoctorBitcoin
Thanks. I'm looking at big chunks of orders in the order books, of people willing to buy at 266, 250, 225, etc, which would have to be burned first. Now of course order books can change fast, but I personally use those big chunks as one of my parameters. I have not been using the order book this way very long yet, so if you thinks it's a completely wrong way to go about things, it would be great to hear about that.
Reply
DoctorBitcoin JeroenHouttuin
That is true, there are several stops before $200-$220 and you are looking it right in another timeframe. But this is a medium term trade following weekly and daily charts, I don't use TV to update short term trades.
Price is not going to go completely directly to that place, this is a multi day/week position that only need more than 20% success.

So it always depends with timeframe you are using.
For example, a 5 minute chart trader would have even a lot more stops than 266, 250 and 225. And he would be right, because he is trading different timeframe.

Regards!
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JeroenHouttuin DoctorBitcoin
You're right, I somehow slid into day trading mode :) Should have just stuck to my stop and target, and close the 5 minute chart :)
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That was fast and an awesome trade ^^
+1 Reply
ioxoi DoctorBitcoin
and very, very lucrative, now waiting for the "BIG" bounce

Very good Trade DoctorBictoin!!!
+1 Reply
1st runner up trade of the week! woohoooooo +1 +1
+1 Reply
DoctorBitcoin SPYderCrusher
Cool! So sad I didn't won it for 0.03. OMG! :P
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