Bitcoin - Probable Scenarios and Setups
Preface:
On March 5th, 2024, Bitcoin made an ATH and proceeded to flash crash to 59K. Currently, it is not yet clear if the correction is over. There is also the question of Bitcoin’s upside and downside potential.
I will describe and explain the most probable scenarios and offer trade setups for each scenario.
Bitcoin ATH and consequent correction created a range. I will use this range to formulate a trading plan.
My base case is that the uptrend is intact until the PA represents evidence to the contrary. Therefore, I am focused on looking for long positions.
To Invalidate the bullish bias, the market structure has to break. Possibly like this:
Scenario No. 1: Short Consolidation & Breakout.
This scenario assumes that Bitcoin will consolidate at the upper 50% of the range and break out to the upside.
The move up from the range low created a tentative demand zone. The proximal line is at 64,230. The distal line is at 62,850. This demand zone is not valid yet; however, I plan to use it because it overlaps with the mid-range.
Possible Trade Setup:
• Entry: 64,200 (proximal line & mid-range)
• SL: 62,600 (below the distal line)
• TP: 69K, 72K, 122K
• R: R: 1:3.2 to first TP.
Scenario No. 2: Reaccumulation.
This Scenario Assumes that 69.3K was the BC. The correction to 59K was the AR. According to this scenario, we are in a reaccumulation range that will last some time, including a sideways range (building a cause), a spring event, and a breakout to the upside.
Possible Trade Setup:
• Entry: 59K (AR)
• SL: 57.9K
• TP: 69K, 72K, 122K
• R: R: 1:6.8
Scenario No. 3: Direct Breakout.
According to this scenario, Bitcoin will break out above the range-high and continue to 72K. According to my analysis, if the price enters the price discovery phase, 122K is my minimum expectation. Regardless, this scenario doesn’t offer a favorable R: R: if it doesn’t include a retest of the range high as support. I try not to trade on FOMO and hope. Yes, it’s possible long, but your position size has to reflect the risk you take. Consider using low-leverage and small position size if you take this trade.
Possible Trade Setup:
• Entry: 69K (range high retest)
• SL: 67.9K (arbitrary).
• TP: 72K, 122K
• R: R: 1:3.3
Scenario No. 4: Bearish Rejection:
In this scenario, Bitcoin tries to break above the ATH and gets rejected. This scenario is difficult to trade because it will be a replica of yesterday’s PA. It didn’t end well for the bears then, and many buyers are still sidelined, waiting for a dip. I don’t intend to trade Bitcoin short; regardless, a short trade has to present you with a clear and fast rejection from the range-high (UT). This rejection should not include a close above-the-range high. Ideally, a bearish engulfing candle will follow the rejection. Even if all these prerequisites will unfold, your first TP has to be at the mid-range. It's not an easy time for the bears.
Possible Trade Setup:
• Entry: 68K (rejection and back inside the range)
• SL: 70K (above the rejection wick)
• TP: 64K, 59K.
• R: R: 1:2
Scenario No. 5: Bearish Breakdown:
As I mentioned, I am focused on the upside until the PA presents evidence to the contrary. Should bitcoin break below the range low, my downside targets are 52K and 49K. These targets have the confluence of S/R levels and the Gann angles. I don’t plan to trade Bitcoin short unless it’s from the high range.
NFA
What do You think? Please share in the comments.
Best Wishes.
On March 5th, 2024, Bitcoin made an ATH and proceeded to flash crash to 59K. Currently, it is not yet clear if the correction is over. There is also the question of Bitcoin’s upside and downside potential.
I will describe and explain the most probable scenarios and offer trade setups for each scenario.
Bitcoin ATH and consequent correction created a range. I will use this range to formulate a trading plan.
My base case is that the uptrend is intact until the PA represents evidence to the contrary. Therefore, I am focused on looking for long positions.
To Invalidate the bullish bias, the market structure has to break. Possibly like this:
Scenario No. 1: Short Consolidation & Breakout.
This scenario assumes that Bitcoin will consolidate at the upper 50% of the range and break out to the upside.
The move up from the range low created a tentative demand zone. The proximal line is at 64,230. The distal line is at 62,850. This demand zone is not valid yet; however, I plan to use it because it overlaps with the mid-range.
• Entry: 64,200 (proximal line & mid-range)
• SL: 62,600 (below the distal line)
• TP: 69K, 72K, 122K
• R: R: 1:3.2 to first TP.
Scenario No. 2: Reaccumulation.
This Scenario Assumes that 69.3K was the BC. The correction to 59K was the AR. According to this scenario, we are in a reaccumulation range that will last some time, including a sideways range (building a cause), a spring event, and a breakout to the upside.
Possible Trade Setup:
• Entry: 59K (AR)
• SL: 57.9K
• TP: 69K, 72K, 122K
• R: R: 1:6.8
Scenario No. 3: Direct Breakout.
According to this scenario, Bitcoin will break out above the range-high and continue to 72K. According to my analysis, if the price enters the price discovery phase, 122K is my minimum expectation. Regardless, this scenario doesn’t offer a favorable R: R: if it doesn’t include a retest of the range high as support. I try not to trade on FOMO and hope. Yes, it’s possible long, but your position size has to reflect the risk you take. Consider using low-leverage and small position size if you take this trade.
Possible Trade Setup:
• Entry: 69K (range high retest)
• SL: 67.9K (arbitrary).
• TP: 72K, 122K
• R: R: 1:3.3
Scenario No. 4: Bearish Rejection:
In this scenario, Bitcoin tries to break above the ATH and gets rejected. This scenario is difficult to trade because it will be a replica of yesterday’s PA. It didn’t end well for the bears then, and many buyers are still sidelined, waiting for a dip. I don’t intend to trade Bitcoin short; regardless, a short trade has to present you with a clear and fast rejection from the range-high (UT). This rejection should not include a close above-the-range high. Ideally, a bearish engulfing candle will follow the rejection. Even if all these prerequisites will unfold, your first TP has to be at the mid-range. It's not an easy time for the bears.
Possible Trade Setup:
• Entry: 68K (rejection and back inside the range)
• SL: 70K (above the rejection wick)
• TP: 64K, 59K.
• R: R: 1:2
Scenario No. 5: Bearish Breakdown:
As I mentioned, I am focused on the upside until the PA presents evidence to the contrary. Should bitcoin break below the range low, my downside targets are 52K and 49K. These targets have the confluence of S/R levels and the Gann angles. I don’t plan to trade Bitcoin short unless it’s from the high range.
NFA
What do You think? Please share in the comments.
Best Wishes.
