BITCOIN (BTC/XBT) DAILY BUY&SELL TRADE SETUPS 2020/12/25
As Bitcoin price is again moving up, we will be looking for it to go up to test the ATH @ $24300. If price reaches the ATH, we will be waiting for two potential scenarios to play out to look for a trade entry on both the long and short sides.
LONG TRADE SETUP: Breakout & Continuation
To open a long position, we are waiting for price to break the ATH, move back down to test previous resistance as support and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $24300 with force, creating space between the price and $24300, falls back down to $24300 and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
2.1 Ideally Engulfing / Break candle has a large candle body with small wicks
2.2 Ideally Engulfing /Break candle closes near the highs of the candle
3. Volume: Above average volume on the bullish engulfing candle or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
SHORT TRADE SETUP: False Breakout at Horizontal Resistance
To open a short position, we are waiting for price to break horizontal resistance at All-Time-High @$24300 and then fall down.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $24300 and then rapidly falls below $24300, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above resistance @$24300) followed by a breakdown candlestick (candle close below $24300)
2.1 Ideally breakout and breakdown candlesticks are consecutive candles, but can also have a few candles in between the two.
2.2 Ideally the breakdown candle has a large candle body with very small wicks
3. Volume: Above average volume ( volume above the average volume line) on both breakout candle and breakdown candle, ideally the breakdown candle's volume is a local high
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (color changing from dark green to light green)
Entry Confirmations:
Ideally we get all confirmations for an entry, but sometimes we might take a trade when we have fewer confirmations. The more confirmations, the higher the win probability, though it also means you miss out on some profitable trades if you're only taking trades when we have all confirmations. It's up to your own risk appetite to decide when you feel comfortable entering a trade. You can also adjust position size based on level of conviction, entering a bigger position when there are more confirmations. Make sure you practice proper risk management and money management.
Trade Management:
I have put in preliminary Stop Loss and Take Profit on the chart, but will adjust based on entry setup, so I will update when we have an entry signal.
Stop Loss: We typically put a SL around the high / low of the entry area, though we might adjust based on market conditions such as high ATR or long wicks.
Take Profit: We typically aim for at least a 2:1 RRR (risk reward ratio), but you can decide to take profits earlier, adjust stop loss as we get into profit, take partial profit, leave a small portion for larger gains, etc. How you want to manage depends on your own risk appetite and what you are comfortable with.
MAKE SURE YOU FOLLOW ME SO THAT YOU DONT MISS TRADE SIGNALS, GET THE LATEST SL AND TP LEVELS, AND FOLLOW THE TRADE PLAY OUT IN REAL TIME!
DISCLAIMER: I'M NOT A FINANCIAL ADVISOR AND THIS IS NOT FINANCIAL ADVICE, AND I WILL NOT BE RESPONSIBLE FOR YOUR WINS OR LOSSES, DYOR.
QUESTION
Would you like me to add a section on overall market conditions in addition to the long&short trade setups to these daily posts? Let me know in the comments. Thanks.
LONG TRADE SETUP: Breakout & Continuation
To open a long position, we are waiting for price to break the ATH, move back down to test previous resistance as support and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $24300 with force, creating space between the price and $24300, falls back down to $24300 and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
2.1 Ideally Engulfing / Break candle has a large candle body with small wicks
2.2 Ideally Engulfing /Break candle closes near the highs of the candle
3. Volume: Above average volume on the bullish engulfing candle or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
SHORT TRADE SETUP: False Breakout at Horizontal Resistance
To open a short position, we are waiting for price to break horizontal resistance at All-Time-High @$24300 and then fall down.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of $24300 and then rapidly falls below $24300, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above resistance @$24300) followed by a breakdown candlestick (candle close below $24300)
2.1 Ideally breakout and breakdown candlesticks are consecutive candles, but can also have a few candles in between the two.
2.2 Ideally the breakdown candle has a large candle body with very small wicks
3. Volume: Above average volume ( volume above the average volume line) on both breakout candle and breakdown candle, ideally the breakdown candle's volume is a local high
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (color changing from dark green to light green)
Entry Confirmations:
Ideally we get all confirmations for an entry, but sometimes we might take a trade when we have fewer confirmations. The more confirmations, the higher the win probability, though it also means you miss out on some profitable trades if you're only taking trades when we have all confirmations. It's up to your own risk appetite to decide when you feel comfortable entering a trade. You can also adjust position size based on level of conviction, entering a bigger position when there are more confirmations. Make sure you practice proper risk management and money management.
Trade Management:
I have put in preliminary Stop Loss and Take Profit on the chart, but will adjust based on entry setup, so I will update when we have an entry signal.
Stop Loss: We typically put a SL around the high / low of the entry area, though we might adjust based on market conditions such as high ATR or long wicks.
Take Profit: We typically aim for at least a 2:1 RRR (risk reward ratio), but you can decide to take profits earlier, adjust stop loss as we get into profit, take partial profit, leave a small portion for larger gains, etc. How you want to manage depends on your own risk appetite and what you are comfortable with.
MAKE SURE YOU FOLLOW ME SO THAT YOU DONT MISS TRADE SIGNALS, GET THE LATEST SL AND TP LEVELS, AND FOLLOW THE TRADE PLAY OUT IN REAL TIME!
DISCLAIMER: I'M NOT A FINANCIAL ADVISOR AND THIS IS NOT FINANCIAL ADVICE, AND I WILL NOT BE RESPONSIBLE FOR YOUR WINS OR LOSSES, DYOR.
QUESTION
Would you like me to add a section on overall market conditions in addition to the long&short trade setups to these daily posts? Let me know in the comments. Thanks.
Comment:
Price has made a new ATH! First of all, for those that hold Bitcoin, congratulations. Now we will monitor to see if we get a false breakout or we continue up for force. If we get a false breakout, and you’re not comfortable with shorting, then you can also consider taking some profit on your btc holdings if you own btc. Of course, the risk is that price can continue to go up and you miss out on gains. It’s up to you how you want to play it, what I will do is keep you updated on price action and trade setups.
Comment:
High risk scalp short here as we closed back below 24.3K.
Comment:
We broke and closed above 24.3k with full body candle on high volume. We then broke down and closed below 24.3k with full body candle on high volume. This is a classic example of false breakout.
That said, I’ve rated this as high risk because overall market is bullish and the breakdown candle closed quite a bit below 24.3k and getting close to the 200MAs, which might serve as support. Ideally we’d like to see there be some more distance between entry and the first level of Support/Resistance. Also, wed prefer macs histogram to not have passed to the other side. In this case we’d prefer to enter when the macd histogram is light green and not red. Again, this is because it gives us more room to run in the direction of the trade before hitting a stall in momentum.
For those aggressive traders who decide to short this, can short at market, set stop above high of red candle or local high and aim for 2:1 RRR, though can take partial profits before then and also leave a small position to run should price really fall from here. Cheers.
That said, I’ve rated this as high risk because overall market is bullish and the breakdown candle closed quite a bit below 24.3k and getting close to the 200MAs, which might serve as support. Ideally we’d like to see there be some more distance between entry and the first level of Support/Resistance. Also, wed prefer macs histogram to not have passed to the other side. In this case we’d prefer to enter when the macd histogram is light green and not red. Again, this is because it gives us more room to run in the direction of the trade before hitting a stall in momentum.
For those aggressive traders who decide to short this, can short at market, set stop above high of red candle or local high and aim for 2:1 RRR, though can take partial profits before then and also leave a small position to run should price really fall from here. Cheers.
Comment:
Also, if we reclaim 24.3k, especially if we close above it and with high volume/ large body candle, then there’s high probability short trade is invalidated and we’d look for potential long.
Comment:
Btw, I mentioned this in one of my other posts, but want to mention again that btc and eth are highly correlated and sometimes one follows the other. Also, eth typically tends to make larger moves, especially to the downside, compared to btc. Meaning, if we have a short signal on btc, it might actually be better to enter a short on eth rather than a short on btc. It also depends on which is performing stronger/weaker at the time.
Comment:
Price has closed back above 24.3k. Those who are more risk averse can consider closing for a partial loss. You can also choose to stay in the trade and see how it plays out. Typically though a good false breakout trade should be followed by pretty rapid and clear price breakdown, which we haven’t gotten here.
Comment:
Those who took the eth short instead of the btc short are in a better position at around breakeven and can also consider either closing here for a small profit or continuing to hold to see if the original trade setup plays out, though I’d suggest closing at least a portion of the position to reduce risk as price action haven’t been ideal. Can always save capital for the next trade.
