If you read through the analysis, I said it would make sense if we also got a pull back to the 61.8% of the impulse move and right now, we are at a tipping point for continuation or a short term correction (where I would definitely buy the dips.)
In this post, I want to show you my case for both a and scenario and how I create a trading plan and strategy that has worked incredibly well for me.
Bitcoin is giving us mixed signals right now and I would open your mind up to the possibility of a move in either direction. In trading, there's not always an edge when it comes to a trade.
The impulse from $4200 with and the break of the 200MA gives a strong case that the technical bottom may be in, but many are claiming that it was only a technical move based on a shorts squeeze in the future's market.
Other analysts believe that there has been evidence of Bitcoin accumulation for months looking at UTXO, NVT ratio and HODL wallet movements.
No matter what you believe, use your charts for confirmation of whatever trade you take.
In this case, the indicators are mixed for now and I want to lay out how I would play each trade as it happens.
I believe that within 24-48 hours, we should get the move we're looking for and the big should return.
Also, in the case of either move, I would limit my exposure to altcoins for now until we see what it does when Bitcoin finds it's next consolidation point.
Lower time frames are giving us classic divergences on on the daily and the 4 hour.
We are also seeing an forming as well, which are classically patterns.
- Enter on the rising support with a stop below.
- Long the retest after a break out (may happen very quickly, so have to monitor it.
- Targets are $5600 and $6100 (I like to set my targets slightly below the fibonacci levels to make sure I can take profit before moving down.)
- Potential with TD sequential showing 9 sell candles on daily, 3 day and weekly.
- Enter short at the top of the resistance with a stop above.
- Enter short on the retest of a break down (may happy quickly also, so have to enter quickly.)
- Targets are the .236 and the .382 and possibly the .5 fibonacci levels.
4 hour -
1 hour -
TD Sequential - 1 day, 3 day, weekly (all showing red TD9 sell candles) -
There are a lot of fractals also showing a potential 20-30% drop if we get a similar move that we saw in 2014-2015.
In most impulsive markets that are showing an uptrend, it is NOT a good idea to short. I only recommend shorting as a method to hedge against strong resistances when you don't want to sell your spot. (for tax purposes (long term vs short term cap gains) or accessibility reasons (cold storage). In my case, it's a combination of both.
I also only recommend shorting if you are able to monitor your position and have significant experience in trading so you understand all of the mechanisms involved.
Now, what you've been waiting for...
How I am playing this move and How I Make Money Either Way Bitcoin Moves:
I am still in a long from $3400 - $3800 on spot (this means no margin.) - on Binance USDT market as I have been DCA (dollar cost averaging to add to my HODL storage. This spot comprises a 'long term' strategy that I will hold for up to a year as I believe we are currently in an uptrend. I also don't want to sell my lower entry Bitcoin because I don't want to get hit with short term cap gains on taxes if I plan on holding it for a year anyway.
This spot Bitcoin is not my trading portfolio, which is a different allocation that I use for trading in and out of alts on a short term/mid term basis.
I am currently hedged from $5320 in a short (on low leverage margin) with a stop loss at less than 1% above for several reasons - I have been in a short since the 8th and have kept it open even though I am leaning because of the funding rates for shorts. (currently up 1.5 BTC in funding alone on my position - follow me on twitter for more information on that.)
If we break upwards, my spot long will gain value and I'll get stopped out of my short position for a small loss that I have already collected 1.5 BTC on in funding. If we break down, my spot long will lose value, but my short will cover+profit whatever value I am losing on my spot long.
With margin, I need LESS to have the same size position as my spot value. This allows me to hedge my assets, while risking less.
The key is that you ONLY hedge at key resistances and not when the market is moving. When you get consolidation or indicators ( TD sequential, , , , moving averages), then you can take out a short term low leverage short to profit and maintain your portfolio to 'beta neutral.'
My risk is small, but I try and set up scenarios where no matter the outcome, I will come out ahead and win. This is the idea behind a 'hedge' fund where you hedge your bets.
Thanks for reading if you enjoyed my work, you can support me by liking the chart and leaving a comment below.
Let me know what your trading plan is.