BTC Next move - Maximizing profits and limiting losses
Updated
In trading, we don't talk about certainties, because they simply don't exist. If anyone claims otherwise, then it's better to ignore their advice and move on.
Is this the bottom? Probably not. Should we, as traders wanting to make money on Bitcoin's moves short right away without understanding the underlying market conditions first? No! We are not gambling, we are making strategic decisions to make money!
Recently we have seen a big downwards move from #Bitcoin, breaking the important $6000 and $5800 support lines and falling to $5400 area. This means that these support lines become strong resistance levels and try to stop any upwards movements.
Let's look at the longer-term, weekly graph and indicators first. Before the drop, the MACD histogram was showing the potential movement to the upside, but after this week's drop, it took a sharp bearish stance, plummeting under the 0 line. The downwards trend, which has been bearish, broke the support lines. Elder's force index, which showed that the bears were slowing down before, showed that bears understandably gained a lot of strength and they are increasing the momentum.
The daily graph has similar data - sharp ADX and DI downwards movement, the drops in RSI and Force index. However, since the drop, RSI reached oversold levels and Force index shows that bears are temporarily losing momentum, thus giving us a chance to use that upwards movement to short #Bitcoin before it drops again.
For simplicity sake, here is a trading setup with low risk and high reward. However, trading in longer timeframe I note that you should not exceed the 5-10x leverage because of the market volatility.
Conservative trader:
Sell order at $5720
Stop-loss (depending on your risk tolerance and leverage) at either
The difference of the stop-loss order comes from market volatility, so the orders wont be stopped out due to background noise.
Take profit
$4500 - $5100 (update will be necessary in future Bitcoin movements)
Depending on the entry levels and profit taking, the risk-reward ratio can potentially be from 1:3 to 1:6, giving us a nice high probability setup with limited risk of equity loss.
Safe trading!
Is this the bottom? Probably not. Should we, as traders wanting to make money on Bitcoin's moves short right away without understanding the underlying market conditions first? No! We are not gambling, we are making strategic decisions to make money!
Recently we have seen a big downwards move from #Bitcoin, breaking the important $6000 and $5800 support lines and falling to $5400 area. This means that these support lines become strong resistance levels and try to stop any upwards movements.
Let's look at the longer-term, weekly graph and indicators first. Before the drop, the MACD histogram was showing the potential movement to the upside, but after this week's drop, it took a sharp bearish stance, plummeting under the 0 line. The downwards trend, which has been bearish, broke the support lines. Elder's force index, which showed that the bears were slowing down before, showed that bears understandably gained a lot of strength and they are increasing the momentum.
The daily graph has similar data - sharp ADX and DI downwards movement, the drops in RSI and Force index. However, since the drop, RSI reached oversold levels and Force index shows that bears are temporarily losing momentum, thus giving us a chance to use that upwards movement to short #Bitcoin before it drops again.
For simplicity sake, here is a trading setup with low risk and high reward. However, trading in longer timeframe I note that you should not exceed the 5-10x leverage because of the market volatility.
Conservative trader:
Sell order at $5720
Stop-loss (depending on your risk tolerance and leverage) at either
- [*5890-5930]
[*6090-6130]
The difference of the stop-loss order comes from market volatility, so the orders wont be stopped out due to background noise.
Take profit
$4500 - $5100 (update will be necessary in future Bitcoin movements)
Depending on the entry levels and profit taking, the risk-reward ratio can potentially be from 1:3 to 1:6, giving us a nice high probability setup with limited risk of equity loss.
Safe trading!
Note
Stop-loss went missing. Its either at 5820-5930 or 6090-6130USD.
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