BTC, a strong shorting opportunity looms
Updated
Background
Traders, investors, the public and the crypto world spent the beginning of 2018 fixated on the parabolic rise and equally sudden plummet from 20k to 6,000. By mid-2018, it was clear that the bull run was over and a massive descending triangle was forming with a base at around 6,000. The Minsky moment came at the end of 2018 with an introductory drop to 5,500 followed by a plummet which finally found support at 3,200. Since then, BTC has rocketed ahead, becoming one of the best asset classes of 2019, rising nearly 60% to 6,200 at the time of writing and crushing all other traditional asset classes.
Resistance ahead
The focus today is on 2018’s year long descending triangle and support base at 6,000 - 6,500 which provides todays opportunity. This support zone bounced sellers 5 times during 2018 and was the focus of crypto traders all over the world. Now with price reaching this important technical level, traders will undoubtedly be fixated on such an important technical level and may see this as an excuse to take profits, wait on the side lines or flip and open a short.
Bearish divergence
RSI levels have also been moving into overbought territory for the past month on the daily. Bear in mind that this by itself is a terrible reason to short given that BTC is so sentiment driven, however a bearish divergence (higher price with lower RSI) is forming on the daily, giving support to our thesis.
Plan
As we are shorting into a bullish trend, we need to be cautious, scaling into our position and re evaluating frequently. I recommend scaling into shorts around the 6,400 region, watching for double tops and signs of exhaustion on the 4hr. As price is still trending up, we will have tight stops, giving up quickly at around the 6,600 area.
There are some special situations where we are just going to run away immediately, if one of Bitcoin’s infamous BGD wicks up rapidly and through our entry range, we are not going to enter any position. So, we will not leave any limit orders overnight and instead monitor our entries closely.
If there is fundamental news, such as more clarity around Bakkt, US crypto regulations, or news, like a resolution to the Binance hack or Bitfinex situation then we will also have to stay on the side lines and potentially go long.
Take profit levels are at the support levels of 5,600 and 5,200 with deeper profit levels at 4,200. Once again, we will be re evaluating frequently, looking for signs of weaknesses at each level before determining whether to continue.
Traders, investors, the public and the crypto world spent the beginning of 2018 fixated on the parabolic rise and equally sudden plummet from 20k to 6,000. By mid-2018, it was clear that the bull run was over and a massive descending triangle was forming with a base at around 6,000. The Minsky moment came at the end of 2018 with an introductory drop to 5,500 followed by a plummet which finally found support at 3,200. Since then, BTC has rocketed ahead, becoming one of the best asset classes of 2019, rising nearly 60% to 6,200 at the time of writing and crushing all other traditional asset classes.
Resistance ahead
The focus today is on 2018’s year long descending triangle and support base at 6,000 - 6,500 which provides todays opportunity. This support zone bounced sellers 5 times during 2018 and was the focus of crypto traders all over the world. Now with price reaching this important technical level, traders will undoubtedly be fixated on such an important technical level and may see this as an excuse to take profits, wait on the side lines or flip and open a short.
Bearish divergence
RSI levels have also been moving into overbought territory for the past month on the daily. Bear in mind that this by itself is a terrible reason to short given that BTC is so sentiment driven, however a bearish divergence (higher price with lower RSI) is forming on the daily, giving support to our thesis.
Plan
As we are shorting into a bullish trend, we need to be cautious, scaling into our position and re evaluating frequently. I recommend scaling into shorts around the 6,400 region, watching for double tops and signs of exhaustion on the 4hr. As price is still trending up, we will have tight stops, giving up quickly at around the 6,600 area.
There are some special situations where we are just going to run away immediately, if one of Bitcoin’s infamous BGD wicks up rapidly and through our entry range, we are not going to enter any position. So, we will not leave any limit orders overnight and instead monitor our entries closely.
If there is fundamental news, such as more clarity around Bakkt, US crypto regulations, or news, like a resolution to the Binance hack or Bitfinex situation then we will also have to stay on the side lines and potentially go long.
Take profit levels are at the support levels of 5,600 and 5,200 with deeper profit levels at 4,200. Once again, we will be re evaluating frequently, looking for signs of weaknesses at each level before determining whether to continue.
Note
Wrekt hard
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