Bitcoin Fake-out! Failed Breakout Lead to Strong Bull Response!
Updated
Bitcoin attempted to break out to the downside and escape the bull channel only to be met with a fierce rejection and rip back to $38,000. There is a slight pause at this critical price with some upside left to the top of the channel but also a good amount of downside to the 200EMA.
How do we trade this?
After a strong bull response like that and continuing in the bull channel, shorting is risky. If you took my last BTC 4HR idea and shorted it to the bottom of the bull channel for a 1:1 Risk/Reward, then you should already be out of that trade. Now we wait for a sell signal showing us a rejection, or you could scalp with a small position to the top of the bull channel. A long scalp would require a stop placed below the rejection low of around $34,500, leaving you with a 3:1 Risk/Reward.
Key Points
1. Failed Breakout to the Downside of the Bull Channel
2. Strong Bull Response back into the Bull Channel
3. Potential Double-Top at $38,000, wait for more price action
4. Either wait for a Sell Signal or Long Scalp with a small position
5. RSI near 70, Small positions longing
I would wait for some more price action before entering a trade. Wait for a strong sell signal bar closing near its low or scalp a pullback to the top of the channel.
You are solely responsible for your trades, trade at your own risk!
Let us know what you think in the comment section below!
How do we trade this?
After a strong bull response like that and continuing in the bull channel, shorting is risky. If you took my last BTC 4HR idea and shorted it to the bottom of the bull channel for a 1:1 Risk/Reward, then you should already be out of that trade. Now we wait for a sell signal showing us a rejection, or you could scalp with a small position to the top of the bull channel. A long scalp would require a stop placed below the rejection low of around $34,500, leaving you with a 3:1 Risk/Reward.
Key Points
1. Failed Breakout to the Downside of the Bull Channel
2. Strong Bull Response back into the Bull Channel
3. Potential Double-Top at $38,000, wait for more price action
4. Either wait for a Sell Signal or Long Scalp with a small position
5. RSI near 70, Small positions longing
I would wait for some more price action before entering a trade. Wait for a strong sell signal bar closing near its low or scalp a pullback to the top of the channel.
You are solely responsible for your trades, trade at your own risk!
Let us know what you think in the comment section below!
Note
Sell signal happened at the close of the 19:00 hours bar just as this idea was posted. Perfect short back to the bull channel bottom! This forms a double top, see if we bounce back into the channel here or start to fall. If you're still holding a full or partial short position, may be reasonable to take some profits here and see if we get more downside to the 200EMA.
-Joe Dean
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