SHORT MSTR
This setup for MicroStrategy (MSTR) is based on its close correlation to Bitcoin price action and a repeating fractal pattern from its last cycle high. The stock appears to be mirroring historical movements, providing a high-confidence opportunity for a short trade as patterns tend to repeat. The trade will focus on DCA into shorts with the expectation of a significant pullback.
Trade Plan Details
1. DCA INTO SHORTS:
DCA Range: $375–$450
This zone aligns with the overhead resistance and prior rejection levels.
Approach: Gradually add to the short position if the price moves higher, staying within this range.
2. POSITION SIZING:
Initial Entry: Start small at $375 to ensure flexibility.
Scaling Strategy: Add more to the position as price approaches $400–$450.
Example:
$375: 1 unit
$400: 2 units
$425–$450: Max position
3. TARGETS:
Short-term Target: $300
Mid-term Target: $250
Long-term Target: $185
These levels correspond to key Fibonacci retracements and historical price reactions from prior cycles.
4. STOP LOSS:
Stop out above $475 (significant invalidation level).
Rationale
Fractal Pattern Repetition:
The price action is nearly identical to the previous cycle high, making it likely to follow the same trajectory.
Bitcoin Correlation:
MSTR closely mirrors Bitcoin's performance. With BTC overextended, MSTR is vulnerable to a significant pullback.
Valuation Concerns:
MSTR's valuation heavily relies on Bitcoin holdings, which are unsustainable at these levels.
Risk-Reward Ratio:
Excellent R:R potential with clear downside targets.
Trade Plan Details
1. DCA INTO SHORTS:
DCA Range: $375–$450
This zone aligns with the overhead resistance and prior rejection levels.
Approach: Gradually add to the short position if the price moves higher, staying within this range.
2. POSITION SIZING:
Initial Entry: Start small at $375 to ensure flexibility.
Scaling Strategy: Add more to the position as price approaches $400–$450.
Example:
$375: 1 unit
$400: 2 units
$425–$450: Max position
3. TARGETS:
Short-term Target: $300
Mid-term Target: $250
Long-term Target: $185
These levels correspond to key Fibonacci retracements and historical price reactions from prior cycles.
4. STOP LOSS:
Stop out above $475 (significant invalidation level).
Rationale
Fractal Pattern Repetition:
The price action is nearly identical to the previous cycle high, making it likely to follow the same trajectory.
Bitcoin Correlation:
MSTR closely mirrors Bitcoin's performance. With BTC overextended, MSTR is vulnerable to a significant pullback.
Valuation Concerns:
MSTR's valuation heavily relies on Bitcoin holdings, which are unsustainable at these levels.
Risk-Reward Ratio:
Excellent R:R potential with clear downside targets.
Trade active
I am in longs for this pop and then I will be out and wait for the short 
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.