BITMEX:XBTUSD   Bitcoin / US Dollar Perpetual Inverse Swap Contract
So previous play resulted in the reversal I was looking for - this play will focus on where we are currently, and where we go from here:

Weekly

We suffered a strong reaction from that 84xx level and have now painted a massive 800 dollar move down. I believe this is the beginning of the road back to 6k. In hindsight this was obvious, as the sheer amount of supply at this level previously should have told us what to expect. I wasn't looking for that particularly metric at the time.

As previously mentioned the issue with these quick sentiment driven uptrends which BTC is renowned for, is that they are very prone to blow off tops and that is exactly what we saw here. A quick reversal, more evidence to support the idea that we will not be moving back up now. A bit of an up move similar to February is not off the menu, but unlikely.

Daily

You can see how we arrived here, after such a big rejection we fell out of the ascending channel and are now painting lower highs and lower lows. We did actually paint a very unusual reversal pattern, a fully completed HnS on the daily RSI , which closed the day before the big drop - this would have been a perfect short signal if only I had seen it at the time.

Anyway this is bearish . A reversal (of this reversal) would necessitate us having to make higher highers and higher lows again. That's a big ask, especially considering the sentiment driven nature of this asset.


My entry

I entered in at a retest of this range with a short.


Current interests

Here is our current trading range. If we reach 7650 again I will add to my short. Above this range is 7750.


I will update this as I go along.
Trade active: This is how I'm seeing the levels right now.

Strong reaction from the bottom area, but right back into resistance.

Comment: Exited in profit.

I'm actually just going to observe here. Mind isn't quite right for this.
Comment: I ended up getting back in finally at 6900 and riding this down to 6300.

For now I have covered my short positions.

1) My original first target was 6079. Which is where we've seen a lot of buying historically. We almost hit that, came pretty close last night.

2) Secondly the definition of capitulation appears to be a drop of 20-30% from local highs - at least this is what i've read in modern Dow Theory books. Yesterday's drop would have satisfied that.

So i'm thinking to myself now, i've been short since 6900. Might be time to pack it in, and await a reversal. My original target after 60xx was closer to 57xx and lower lows. But based on the above, now I'm not sure. If we were to expect a proper reversal signal - we're looking for a bounce *counter trend* as you said, and then perhaps a higher low.

Now let's consider bull scenario?

If we were to expect a proper reversal signal - we're looking for a bounce *counter trend* as you said, and then perhaps a higher low.

Or bear scenario:

A bounce here, followed by a lower low. Which would be a signal to get back in.

Either way, I think perhaps it's time to cover. Dow Theory would have called that 25% drop a capitulation easily, by definition. Which can be an early signal for a reversal.
Comment: So for clarity - Next steps are to await a higher low or lower low and react accordingly.

Comments

Hit target, trade closed.

Now awaiting next steps.
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