Deeper study into funding rates on bitcoin. Combining the funding rates with supply/demand, trendlines and Fib. levels is pure gold. I regret not finding this out earlier, credits to jacobcanfield for pointing it out.
Of course we never know what the market is going to do. Thats why we as traders think in probabilities.
First lets explain funding rates if your not familiar. To keep a long or short position open a trader has to pay a certain fee to the exchange depands on the exchange by which time frame they charge or at what times they calculate a new funding rate. Bitmex puts out funding rate every 8 hours.
Points is Negative funding rate (green boxes) that is where Shorts pay longs. So when you are in a short position you have to pay to keep the position open. So lets say price stays around the same level for 3 days and the funding rate is negative, during the 3 days the trader in a short position will lose money and a trader in a long position will earn money.
So when a funding rate turns negative it is likely more traders will either close their short.
Negative rates= Shorts pay Longs
Positive rates= Longs pay Shorts
So lets develop a strategy around this.
In the chart green boxes are Long/buy areas and the red boxes are Short/sell areas.
Looking at the funding rates and price most reversals take place 3-7 days after funding rates switch from positive to negative or vice versa. Combine this with Support and resistance areas and the view becomes clear.
Whenever bitcoin approaches an important zone funding rates indicate which way the trend will go.
Lets say bitcoin is dropping and is approaching a support area with a funding rate that is negative for at least 3 days, you can put a order in on that support. Because the probability is in favor of the upside.
Strategy rules:
At least 3day of funding rate switch
Combine it with a support or resistance area
Of course we never know what the market is going to do. Thats why we as traders think in probabilities.
First lets explain funding rates if your not familiar. To keep a long or short position open a trader has to pay a certain fee to the exchange depands on the exchange by which time frame they charge or at what times they calculate a new funding rate. Bitmex puts out funding rate every 8 hours.
Points is Negative funding rate (green boxes) that is where Shorts pay longs. So when you are in a short position you have to pay to keep the position open. So lets say price stays around the same level for 3 days and the funding rate is negative, during the 3 days the trader in a short position will lose money and a trader in a long position will earn money.
So when a funding rate turns negative it is likely more traders will either close their short.
Negative rates= Shorts pay Longs
Positive rates= Longs pay Shorts
So lets develop a strategy around this.
In the chart green boxes are Long/buy areas and the red boxes are Short/sell areas.
Looking at the funding rates and price most reversals take place 3-7 days after funding rates switch from positive to negative or vice versa. Combine this with Support and resistance areas and the view becomes clear.
Whenever bitcoin approaches an important zone funding rates indicate which way the trend will go.
Lets say bitcoin is dropping and is approaching a support area with a funding rate that is negative for at least 3 days, you can put a order in on that support. Because the probability is in favor of the upside.
Strategy rules:
At least 3day of funding rate switch
Combine it with a support or resistance area
Comment:
Comment:
Bounce of the 382 fib and 3 touches of the upper trend line. Still have resistance at 8300 and 200DMA. Support on lower triangle trendline and s/r flip at 8050
Comment:
Just to be clear. DO NOT LONG RIGHT HERE. Only long the retest after we break the 200dma. Or long when we get back down to the 382 fib. The 200dma is right now used as short fillings it needs a decent volume push to go up thourgh that first
Comment:
Comment:
Comment:
Range played out well, Long the big support zone 382 and 100wma and sell the 200DMA. We were forming a descending/symetric triangle pattern wich we broke out of right now. Possible long zone is the s/r flip of zone and trendline.