Sunday, 6 July 2025 - ETH/USDT.P ShortTrading Journal Entry: ETH/USDT SHORT
Date of Entry: July 7, 2025
Asset: ETH/USDT Perpetual Futures
Position: SHORT
Entry Price: $2,580.00
Stop Loss: $2,615.00
Take Profit: $2,510.00
Risk/Reward Ratio: 2.00:1
Setup Grade: A+
1. Core Thesis
The trade is a high-confluence short position designed to capitalize on a probable liquidity hunt below an obvious daily support level. The core thesis is that the market is incentivized to purge over-leveraged longs, whose positions are revealed by order flow data, within the context of a clear daily downtrend.
2. High-Timeframe Context (The Strategic Landscape)
My analysis began with a top-down approach to understand the broader market environment.
Weekly Context: The market is in a large-scale consolidation range. This tells us that expecting a massive, sustained trend breakout is a lower probability. Instead, trading between major support and resistance zones is the governing dynamic.
Daily Context: The immediate trend on the daily chart is bearish. Price had established a series of lower highs and lower lows, bringing it down to a major area of historical support and the Volume Profile Point of Control (POC) around the ~$2,550 zone. This created the central conflict: a bearish trend meeting a significant support level. A naive analysis would be to buy this support.
3. Order Flow & Sentiment Analysis (The Deciding Factor)
This layer of analysis was the key to resolving the trend vs. support conflict and formed the backbone of my bearish bias.
Liquidation Analysis: The liquidation maps revealed a very large and proximate pool of long liquidations clustered between $2,470 and $2,500. This liquidity acts as a powerful magnet for price, as market makers are incentivized to push price toward these zones to absorb orders.
Funding Rate Analysis: Funding rates across almost all exchanges were consistently positive. This provided clear evidence that derivative traders were predominantly positioned long, were paying a premium to maintain those longs, and were betting on the daily support holding. This identified a crowded trade.
Synthesis: The presence of a large downside liquidity target (the "magnet") combined with a vulnerable and crowded group of participants (the "fuel") created a high-probability scenario for a contrarian move. The path of least resistance was for the market to push through the "obvious" support to liquidate these longs.
4. Tactical Execution (The Entry Trigger)
With a firm directional bias, the final step was to find a low-risk entry.
4-Hour Structure: The price action at the daily support level was weak. The 4H chart showed a low-volume, sideways consolidation, not a strong bullish rejection. This lack of a decisive bounce was my first clue that the support was fragile.
1-Hour Entry Pattern: I identified the perfect entry trigger by observing the 1H chart.
Price staged a minor rally toward the $2,580 resistance level.
Crucially, this rally occurred on visibly declining volume, signaling a lack of genuine buying interest. It was a corrective, not an impulsive, move.
My entry at $2,580 was placed at a clear support-turned-resistance flip zone, allowing us to short into weakness at a favorable price.
5. Risk Management (The Trade's Foundation)
Stop Loss ($2,615): The SL was not an arbitrary price but a logical invalidation point. It was placed just above a recent 1H structural swing high. A move above this level would have proven the "weak rally" thesis incorrect and signaled that buyers had taken control.
Take Profit ($2,510): The TP was chosen for two reasons:
Rule Compliance: It mathematically secured my required 2:1 risk/reward ratio.
Strategic Placement: It sits just ahead of the psychological $2,500 level and the densest part of the liquidation pool, increasing the probability of a fill before any potential support-driven bounce.
This trade represents a textbook example of my strategy: using high-timeframe analysis to build a directional bias, confirming it with order flow and liquidity data, and executing with precision on a low-timeframe pattern, all while adhering to strict risk management rules.
