This is a private post for Target Hit members. I want you guys to see in action what goes through my head when I am trading.
First, this is purely for educational purposes. I can't tell you where and when to enter and exit a trade, only you can do that.
If you are entering a trade solely based on what Rick or myself are doing, STOP.
(All credits to Rick though, he's pretty great)
The right answer though, is to do your own analysis and then use work from someone more experienced to compare. This is how you will grow as a trader and an analyst.
Alright, let's get right into it. First, let's take a look at the Daily chart on GDAX.
We've got a swing low bottoming at our blue trend line there, followed by a swing high. Since this was a lower swing low, we're now looking for two things to assume a daily bias.
Primarily, what we would like to see is a new daily swing low that breaks the old swing low for a bearish daily bias. Or, if we formed a higher swing low, then we'd wait for a higher swing high to confirm a bullish daily bias.
What are swing highs/lows? Swing high is a three candle formation. A high with a lower high on each side.
Swing low is a low with a higher low candle on each side.
So, we got our lower swing low. This is an alert to look for shorting opportunities. Normally, we'd look for a lower swing high as our confirmation and entry point for a short.
But, this market isn't normal right now. There is panic, and fear. I'm not entirely sure we will even see a swing high at all before another lower swing low.
This is called a waterfall, but that's not important.
Now, moving over to the right. The hourly. This is where yesterday's pump was a clear short entry. We wicked perfectly off the 79% retracement, which is exactly where I'd look to short. 70.5% - 79% optimal trade entries. Then, a quick, strong sell off to the algorithmic price level 3333. Now, shorting into a short squeeze like that can be risky especially if you're less experienced. So where is the safe short? Well, we got a nice little uptrend on the 1h after the bounce from 3333. That ended up failing between the 70.5% retrace and the 62%. Both of these are optimal short entries. This is where I would enter if you want to have a trade with less risk.
Now, where can we expect price to go in this clear downtrend? Easy. From the original move, Take profit would be the Swing low area, 3222. This is where you should secure enough profit to make this trade risk free i.e. if you get liquidated, you'd still break even.
Now, Target 1 is our 127% Extension, 3120, and Target 2 is our 162% Extension, 2975. Full symmetrical swing would end at 2820, and in a strong panic sell like this, I think it's safe to let a small portion of your position run to that target.
Where would you put your Stop Loss? The 100% retrace - 3625. Not lower, not higher. I have included the number 107.5% for scalping lower timeframes as bitmex can have wicks that are outside of the normal price range.
So there you have it. An easy, low risk, 400 - 600 point short. I hope this was helpful.
Good luck traders.
First, this is purely for educational purposes. I can't tell you where and when to enter and exit a trade, only you can do that.
If you are entering a trade solely based on what Rick or myself are doing, STOP.
(All credits to Rick though, he's pretty great)
The right answer though, is to do your own analysis and then use work from someone more experienced to compare. This is how you will grow as a trader and an analyst.
Alright, let's get right into it. First, let's take a look at the Daily chart on GDAX.
We've got a swing low bottoming at our blue trend line there, followed by a swing high. Since this was a lower swing low, we're now looking for two things to assume a daily bias.
Primarily, what we would like to see is a new daily swing low that breaks the old swing low for a bearish daily bias. Or, if we formed a higher swing low, then we'd wait for a higher swing high to confirm a bullish daily bias.
What are swing highs/lows? Swing high is a three candle formation. A high with a lower high on each side.
Swing low is a low with a higher low candle on each side.
So, we got our lower swing low. This is an alert to look for shorting opportunities. Normally, we'd look for a lower swing high as our confirmation and entry point for a short.
But, this market isn't normal right now. There is panic, and fear. I'm not entirely sure we will even see a swing high at all before another lower swing low.
This is called a waterfall, but that's not important.
Now, moving over to the right. The hourly. This is where yesterday's pump was a clear short entry. We wicked perfectly off the 79% retracement, which is exactly where I'd look to short. 70.5% - 79% optimal trade entries. Then, a quick, strong sell off to the algorithmic price level 3333. Now, shorting into a short squeeze like that can be risky especially if you're less experienced. So where is the safe short? Well, we got a nice little uptrend on the 1h after the bounce from 3333. That ended up failing between the 70.5% retrace and the 62%. Both of these are optimal short entries. This is where I would enter if you want to have a trade with less risk.
Now, where can we expect price to go in this clear downtrend? Easy. From the original move, Take profit would be the Swing low area, 3222. This is where you should secure enough profit to make this trade risk free i.e. if you get liquidated, you'd still break even.
Now, Target 1 is our 127% Extension, 3120, and Target 2 is our 162% Extension, 2975. Full symmetrical swing would end at 2820, and in a strong panic sell like this, I think it's safe to let a small portion of your position run to that target.
Where would you put your Stop Loss? The 100% retrace - 3625. Not lower, not higher. I have included the number 107.5% for scalping lower timeframes as bitmex can have wicks that are outside of the normal price range.
So there you have it. An easy, low risk, 400 - 600 point short. I hope this was helpful.
Good luck traders.
Now we look for a swing low that breaks a previous swing low. 3250 ish area.