Short

Believe it or not, it's actually not crazy to short Bitcoin Here

Updated

So bitcoin has had a nice run from the 6k reversal. And a big bull push since $8300. I generally traded it long but was a bit cautious. I sold the remainder of my position at $9500. Now I'm building a short.

I've been told I'm crazy to short because:

1. This is 3rd wave of 3 in elliott wave
2. We broke the 10k psychological barrier.
3. The sentiment is super bullish
4. Its been going up so its going to keep going up.

The reality is that I'm a long term bull on bitcoin and crypto. And there many great fundamental reasons to be long. I can also see us going up strong from here.

However, I'm also a trader and trade opportunities. This is a great opportunity.

The weekly chart had a swing down. It needs a close above to invalidate the bearish movement. So as a trader, I look for places to short when the weekly is still bearish.

Right here is a good place to short. Here is why.

1. There is big resistance from the triangle breakdown. Supply in this area.
2. A safe stop at $10600
3. Extended since $8300 so good chance to get a pullback at least
4. You can take partial profits on a pullback and pay for the stop loss
5. 200MA on the 4 hour

So risk is $500 to get stopped. Reward is that we go down to make new lows or at least retrace the entire move up from $6000.

Target 1= 50% fib at $8000 is 4 to 1
Target 2 = 61.8% fib at $7500 is 5 to 1
Target 3 = new lows below $5000 is 10 to 1 maybe more.

I could lose this trade 8 out of 10 times and the 2 times it works would pay for it. If we retrace to $9500 which would be a natural area to retest, then I'll sell part of my position and book $500 to help pay in case I get stopped out later.

What if I get stopped out? Depending on the formation I might consider another try with a tight stop, but I think its more likely we'd build a base and go after the top trendline. Theres heavy resistance at $12500 to and the trend line will be just under that area. Breaking that and I'm bull city, which I'd love to see. Trading bullish markets is much easier and I own crypto for the long run so I'd welcome another shift back to bullish.

Note

The big move was aggressive and I stayed in that short all day. Finally getting a well needed pullback, so this should get me in a free a trade.

However, the move was strong and this pullback looks corrective, so I'll start scaling out of many shorts and keep my position small so I can watch price action. If we get back above $10200 with a really strong move, then I will not add and if I get stopped out so be it. If we stall at $10200 and I see signs of weakness, I'll add to shorts. This is where price action is important and helps guide me.

What I was hoping to see was a sharp, aggressive sell off. Until I see this, the chances get better that bitcoin can go to the next support level

Note

Bullish price action would get me cautious. If Bitcoin stays above $9500 then consolidates sideways between $9800 and $10300, then I will reduce risk. The longer it spends time around the 10k resistance, the more chances it has to break up. If it does, then there isn't a lot of resistance until that trendline, so expect us to go there. If we go there without a deeper pullback then that will be an even better shorting opportunity.

Note

It is important to be able to adjust strategy based on price action. And have a plan if the trade doesn't go your way. Until we see volume in selling, this move can continue up.

Note

As I said in my last comment. Bitcoin consolidated above 10k which gave us signs that it had more room to run. I reduced risked and only tried a small short with a tight stop at $10500, where I got stopped out.

In hindsight, I took long profits too early at $9500 but I would not have changed my trade because I short resistance when the weekly is still in a bear trend. Whenever markets turn, I will usually get stopped out like this. Price action helped me manage the trade.

There is a lot of opportunity to short. However, its very difficult to try to short a strong trending market. FOMO buyers can take this higher than anyone would expect. Its also way too late to get long.

Now, the medium term price action is very bullish, which means that I will favor going long on a pullback. That said, we still need to get past that downtrend line and have green weekly candle next week before I start shifting to a weekly bull.

Sometimes moves like this can be convincing, market has a bit more work to do.

Note

Shorted and stopped at $10500 then also at 11k. I had partial profits from to help pay for stops. Then that last green area at $11200, I shorted fairly heavy because it was over extended so much.

Certainly I would have done better to go long, but I didn't see us making a $3000 move without a pull back and never expect that unless we've already turned bullish on the weekly or right after an overextended down move (like from 6k).

The short paid off big when it my first target of $10300. My stop moves to $10860 in case this has another leg up.

Next targets are $9900 and $9500 fib levels. Then I will look to go long. But I'm still concerned with this move. It needs to build support in this range for 3-4 days.

Note

Reversed at the .618. So we'll see if the IHS on the 15 minute holds it up and we go higher or we make a wave towards $9500 - $9900.

I think we are going higher before dropping, but price action here will give us some clues. A slow choppy bullback and signs of support holding and I'll take a shot at buying the dip. Aggressive selling and I'll hold my short position.

rzmb44

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