BTC: THE SEARCH FOR LIQUIDITYAnother week, another narrative for the markets! We are in the midst of a geopolitical stronghold, that from a traders perspective; turns attention towards risk-off assets. Besides the political turmoil, we are facing an interest rate hike in the US on March 15, which according to the fed watch could turn out into a triple or quadruple hike of 75 to 100 base points. Personally I think they won't go beyond 50 base points, which would still mean a lot to the equity markets.
Now, let's look at Bitcoin and a potential short term trade set up. BTC corrected from its overextended downtrend on January 24th with a nice 37% rally towards the daily sigma high - an important level for mean reversion. After it tapped this area, we formed an M pattern which completed at the start of the Asian session. This means that we are currently in no man's land with market makers keeping an eye on equity markets and potential hedging positions for further corrections.
Bitcoin is now facing the weekly psychological high at 42700, if we break it to the upside, this means market makers favour higher prices for the trading sessions ahead. However, when and if we retest this level and get rejected, we could face a correction towards the liquidity zone. Special interest goes towards the local trend line below the rising wedge formed last week, if we can not hold it as support we are likely to see an impulse to the downside towards the liquidity zone where billions of long liquidation are stacked. This means 40K is still a crucial pivot point and an important take profit area to hedge against a potential bullish move. A break of 40K would mean another round of corrections across the alt coin market and potential entries for long positions for a short term bounce.
In conclusion, if the intra day price action confirms the conditions of an entry we can open a short position (max 10x) with a nice risk/reward ratio of 4.2:
- TP1 41600
- TP2: 40800
- TP3: 38500
Make sure you trail your stop loss in profit when your position goes green by more than 1%. In this case you always lock in a profit, even when you get stopped out.
Be mindful that Monday tends to represent a false move and market makers would want to take the shorts out before they move lower so ideally wait for tonight's Asian session or tomorrow's New York session for an entry.
IMPORTANT: this is not financial advice, trade or invest based on your own risk and research.
COMMENT: please let me know in the comments if you like these type of day trader set ups and would like to see more and like the idea if you agree. Feedback is always appreciated and I will reply to questions!
ANALYSES: for a long term Bitcoin analysis, check the linked idea below, good luck and trade safe!
