Bitcoin's Measured move and how to profit from it
Updated
Bitcoin did something crazy last night, almost managing to rise 500 points in an hour. This move got pushed down, but it showed something imporant - market was (at least temporarily) highly oversold. This caused a lot of overleveraged shorts to be liquidated, adding more fuel to fire.
This move made a great deal of sense, too. The number of shorts has explosively grown since the November break of $6000, now surpassing the old ATHs. If we look at Bitfinex shorts vs longs (chart will be added below), we can see that we were highly oversold, passing the old ATHs of shorts in a blip, meaning we desperately needed some form of correction.
Now, I think that this was just be a correction inside a daily-chart bear flag which we might continue to climb before making another drop. If we measure the last bear flag drop distance from the 29th of November high to the 7th of December low, we see a drop of a bit over $1000. Should the bear flag continue, we can use a method called measured move* to find our next price targets. This means mirroring the last drop length to the next potential drop, which gives us the target of around $2800. This is a rough estimate and can vary, but this is the price we should pay a lot of attention to.
Now, the stop loss we place at around $3900 for Bitfinex and around $3800 on Bitmex. For entry we can use the upward movement inside the bull flag, like the one that happened yesterday in Bitfinex. For margin I still recomamend to use maximum of 5x, 10x if you think you can time it really well and not be squeezed out and anything higher if you most likely want to lose all your money.
Xiexie nimende guanzhu.
*The Measured Move is a three-part formation that begins as a reversal pattern and resumes as a continuation pattern. The Bearish Measured Move consists of a reversal decline, consolidation/retracement and continuation decline.
This move made a great deal of sense, too. The number of shorts has explosively grown since the November break of $6000, now surpassing the old ATHs. If we look at Bitfinex shorts vs longs (chart will be added below), we can see that we were highly oversold, passing the old ATHs of shorts in a blip, meaning we desperately needed some form of correction.
Now, I think that this was just be a correction inside a daily-chart bear flag which we might continue to climb before making another drop. If we measure the last bear flag drop distance from the 29th of November high to the 7th of December low, we see a drop of a bit over $1000. Should the bear flag continue, we can use a method called measured move* to find our next price targets. This means mirroring the last drop length to the next potential drop, which gives us the target of around $2800. This is a rough estimate and can vary, but this is the price we should pay a lot of attention to.
Now, the stop loss we place at around $3900 for Bitfinex and around $3800 on Bitmex. For entry we can use the upward movement inside the bull flag, like the one that happened yesterday in Bitfinex. For margin I still recomamend to use maximum of 5x, 10x if you think you can time it really well and not be squeezed out and anything higher if you most likely want to lose all your money.
Xiexie nimende guanzhu.
*The Measured Move is a three-part formation that begins as a reversal pattern and resumes as a continuation pattern. The Bearish Measured Move consists of a reversal decline, consolidation/retracement and continuation decline.
Note
BTCUSDLONGS vs SHORTS tradingview.com/chart/kloI0Vpy/Note
Right, I am still a beginner in this. Here is the picture:Note
From the chart above we can see that shorts are mostly taking profits and traders are not really adding to long positions - another bearish sign.
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