Technical Review - BTC
There are lots of confident predictions about where markets will head next. However, at its core, trading is about speculation and taking calculated risks—not about certainty. In this post, I'll share some technical trades in BTC from recent price action. While hindsight bias will naturally come into play, I did take several of these setups in real time.
Higher Timeframe Context (1-Month)
In terms of the higher timeframe context, there has been a clear uptrend with two distinct continuation setups (noticeable move up, followed by a contraction towards the mean price which then sets up for a continuation). At the current time there has been an attempt for a third move.
These could have been entered on the range expansion from the contractive state, however when prices become extended towards the outer boundaries we better be cautious due to risk of mean reversion. At such extremes, its better to scale out or look for better opportunities. These locations are often reached as measured moves (assumed average price volatility is sustained, as seen on the right side of the chart). This does not meant the move is over, but rather where the risk of mean reversion is increased, price can deviate from average volatility all the time.
This analysis is not a prediction of future behavior, but rather a review of recent events and how they could have been traded in technical terms. There is also a component of discretion, which occur in in real time, but is not relevant to asses at this point.
Before we take a trade we want to consider:
This all boils down to the search for imbalance.
Daily Timeframe: Range-Bound Trading Opportunities
In terms of my trading timeframe, which is the daily, BTC has spent the past months within a distinct range. When such a structure is in play, the locations of interest are at or near the extremes (upper and lower boundaries) where imbalances tend to occur.
Efficient trades at these extremes typically arise when there’s a failure test (also known as a failed breakout or 2B pattern). In these cases, price pushes outside the boundary, fails to follow through, and reverses back inside—often trapping participants and can fuel a move in the opposite direction.
This dynamic tend to hold until there is an actual breakout, there is no bulletproof way to know what will happened, but most of the time it can be helpful to reference the higher timeframe. For example, in case breakout happen in opposite to the trend we can treat them as potential failures, while with trend (as in this case with BTC to the upside) we can either treat them as breakouts or at least not fade the move. There are however exceptions and nuances to these type of plays.
On the chart, I’ve marked all failure tests where price moved back into the range and formed bullish continuation structures. These setups offered opportunities to enter and take profits. In my case, I typically targeted 1R trades on these setups, with some extending into full measured moves.
In conclusion, its probably a decent idea to have a structured framework to locate imbalance, but it must be combined with discretion so we can adapt to different conditions. Its not about confident predictions, but rather probabilities and calculated risks. Don't become attached to positions, let the cumulative effect drive results.
Higher Timeframe Context (1-Month)
In terms of the higher timeframe context, there has been a clear uptrend with two distinct continuation setups (noticeable move up, followed by a contraction towards the mean price which then sets up for a continuation). At the current time there has been an attempt for a third move.
These could have been entered on the range expansion from the contractive state, however when prices become extended towards the outer boundaries we better be cautious due to risk of mean reversion. At such extremes, its better to scale out or look for better opportunities. These locations are often reached as measured moves (assumed average price volatility is sustained, as seen on the right side of the chart). This does not meant the move is over, but rather where the risk of mean reversion is increased, price can deviate from average volatility all the time.
This analysis is not a prediction of future behavior, but rather a review of recent events and how they could have been traded in technical terms. There is also a component of discretion, which occur in in real time, but is not relevant to asses at this point.
Before we take a trade we want to consider:
- What is the current structure in play, is it a trend or a range?
- Where is price located within that structure, are we at or near extremes?
- In case above conditions are met, is there a setup or an entry trigger?
This all boils down to the search for imbalance.
Daily Timeframe: Range-Bound Trading Opportunities
In terms of my trading timeframe, which is the daily, BTC has spent the past months within a distinct range. When such a structure is in play, the locations of interest are at or near the extremes (upper and lower boundaries) where imbalances tend to occur.
Efficient trades at these extremes typically arise when there’s a failure test (also known as a failed breakout or 2B pattern). In these cases, price pushes outside the boundary, fails to follow through, and reverses back inside—often trapping participants and can fuel a move in the opposite direction.
This dynamic tend to hold until there is an actual breakout, there is no bulletproof way to know what will happened, but most of the time it can be helpful to reference the higher timeframe. For example, in case breakout happen in opposite to the trend we can treat them as potential failures, while with trend (as in this case with BTC to the upside) we can either treat them as breakouts or at least not fade the move. There are however exceptions and nuances to these type of plays.
On the chart, I’ve marked all failure tests where price moved back into the range and formed bullish continuation structures. These setups offered opportunities to enter and take profits. In my case, I typically targeted 1R trades on these setups, with some extending into full measured moves.
In conclusion, its probably a decent idea to have a structured framework to locate imbalance, but it must be combined with discretion so we can adapt to different conditions. Its not about confident predictions, but rather probabilities and calculated risks. Don't become attached to positions, let the cumulative effect drive results.
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