After a bullish move interestingly countertrending stock markets from 3200 to 4000, BTCUSD has started retracing down to 3800 (0.5 fib), and has now halted on this strong red support, accumulating since then. At this point, both bullish and bearish cases are arguable.
On the bear side, the accumulation takes the shape of a descending triangle, indicating a clear entry for a second leg downwards if the 3800 support were to be broken in convincing volumes. Green levels (3700 = 0.618 retrace ; 3500/3400 = 1 to 1 extension of first leg down) are next potential supports along the way down. One should be careful of a fakeout if entering a short. I have a small stop short entry at 3799 with tight stop-loss, and I would enter a bigger short position on sight of a first lower high below 3800. TP1/TP2/TP3 : green supports.
On the bull side, we have an RSI divergence building up on multiple time frames, and the spirit of Christmas who makes miracles. I don't believe in this outcome yet, but "one should always be prepared for all foreseeable scenarios". A convincing break of 4000 level would shift my sentiment to bullish, hence a small stop long entry at 4001 setup. Same train of thought as the bearish case for a bigger long position. TP1 : 4299, then let the winner ride.
On the bear side, the accumulation takes the shape of a descending triangle, indicating a clear entry for a second leg downwards if the 3800 support were to be broken in convincing volumes. Green levels (3700 = 0.618 retrace ; 3500/3400 = 1 to 1 extension of first leg down) are next potential supports along the way down. One should be careful of a fakeout if entering a short. I have a small stop short entry at 3799 with tight stop-loss, and I would enter a bigger short position on sight of a first lower high below 3800. TP1/TP2/TP3 : green supports.
On the bull side, we have an RSI divergence building up on multiple time frames, and the spirit of Christmas who makes miracles. I don't believe in this outcome yet, but "one should always be prepared for all foreseeable scenarios". A convincing break of 4000 level would shift my sentiment to bullish, hence a small stop long entry at 4001 setup. Same train of thought as the bearish case for a bigger long position. TP1 : 4299, then let the winner ride.
Trade active:
Bearish break happened. My stop short @3979 and my TP1 @3701 triggered before I could see anything. Always a strange but nice feeling to reconnect to see your trade got open and closed in a matter of minutes ;-)
TP2 @3501 is much riskier, since 0.618 bearish retracement is already done. If we add the fact that 3700 support is a strong one in recent price action, we can either close the entire position manually, or let the winner ride with a tight profitable stop for the remainder of the position (my choice).
After that ? Another big bullish move to complete a probable dead cat bounce ?
TP2 @3501 is much riskier, since 0.618 bearish retracement is already done. If we add the fact that 3700 support is a strong one in recent price action, we can either close the entire position manually, or let the winner ride with a tight profitable stop for the remainder of the position (my choice).
After that ? Another big bullish move to complete a probable dead cat bounce ?
Trade closed manually:
As mentioned previously, we didn't reach TP2, trade was closed by stop.
- Bullish break : 4001 stop long / 4139 TP1 / SL to be set depending on strength
- Bearish break : 3979 stop short / 3701 TP1 / 3501 TP2 / SL to be set same way