Bitcoin (BTC/XBT) Daily Long&Short Trade Setups 2021/01/06
Updated
LIVE TRADES WILL BE CALLED IN THE LATEST DAILY POST. FOLLOW ME TO TRADE LIVE WITH ME.
MARKET OVERVIEW
TRADES(S) RECAP: LATEST 3 TRADES
TRADE SETUPS
Below are the potential trade setups that I would be interested in trading. Regardless of the path that the price takes, I will be monitoring the market for a valid trade entry signal.
Long Trade Setup #1: Breakout and Continuation
To open a long position, we are waiting for price to break resistance, move back down to test previous resistance as support and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of 34.8K with force, creating space between the price and 34.8K, falls back down to 34.8K and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle, a pinbar, or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
2.1 Ideally Engulfing / Break candle has a large candle body with small wicks
2.2 Ideally Engulfing /Break candle closes near the highs of the candle
3. Volume: Above average volume on the bullish engulfing candle, pinbar , or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
Long Trade Setup #2: Retest and Continuation (200MAs)
To open a long position, we are waiting for price to retrace back down to test the 200MAs and then continue moving up.
Trade Entry Confirmation:
1. Price Action: Price needs to move back down to the 200MAs, currently projected to be @ $32.2-32.5K by the time price reaches it, and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle, a pinbar, or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
3. Volume: Above average volume on the bullish engulfing candle, pinbar, or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
NOTE: For the highest probability trades, price touches both the 200SMA and the 200EMA. If price only touches 1 of the 200MAs, the win probability decreases, and if price doesn't touch any of the 200MAs, the win probability is even lower. In a strongly trending market, the win probability for touching one or none of the 200MAs is higher than for a slow-moving market, but it is still higher risk.
Short Trade Setup #1: False Breakout
To open a short position, we are waiting for price to break above the horizontal resistance @ 34.8K and then fall back down.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of 34.8K and then rapidly falls below 34.8K, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above 34.8K) followed by a breakdown candlestick (candle close below 34.8K)
2.1 Ideally breakout and breakdown candlesticks are consecutive candles, but can also have a few candles in between the two
2.2 Ideally the breakdown candle has a large candle body with very small wicks
3. Volume: Above average volume ( volume above the average volume line) on both breakout candle and breakdown candle, ideally the breakdown candle's volume is a local high
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (color changing from dark green to light green)
NOTE: For false breakout/false breakdown trade setups, sometimes trading the other pair (eg. trading BTC when the setup is on ETH and vice versa) can be even more profitable if the other pair is looking weaker (for false breakout setup) or stronger (for false breakdown). Some indicators to consider are where the price is relative to the 200MAs, size of recent candles, volume , and overall price action, market structure, and chart patterns.
ENTRY SIGNAL TYPES
Trade calls will be separated into two categories, official and unofficial. The reason for the distinction is that official entry calls are only for high probability trade setups whereas unofficial calls might have slightly lower probability of winning but positive net profitability due to high risk reward. As I see a lot of traders, do not practice proper risk management and position sizing, I want to protect them from the second type of trades. At the same time, I know there are more sophisticated traders who can take advantage of both types of calls. So this is the solution that I’ve come up with, which is to separate the two trade types into two types of entry calls. Official entry calls will come with detailed entry, stop loss and take profit levels, whereas unofficial trade entries might or might not and will rely a little bit more on the trader themselves to manage the trade. This is one way to distinguish the more experienced traders from the newer ones. If you are unable to enter an unofficial trade entry without those details, then it means that you shouldn’t be taking those trades and should stick only to the official trades.
1. Official entry calls will be posted using “trading active” post type.
2. Unofficial entry calls are potential good trading opportunities that will be posted using “comments” post type.
ENTRY CONFIRMATIONS
Ideally we get all confirmations for an entry, but sometimes we might take a trade when we have fewer confirmations. The more confirmations, the higher the win probability, though it also means you miss out on some profitable trades if you're only taking trades when we have all confirmations. It's up to your own risk appetite to decide when you feel comfortable entering a trade. You can also adjust position size based on level of conviction, entering a bigger position when there are more confirmations. Make sure you practice proper risk management and money management.
TRADE MANAGEMENT
I have put in preliminary Stop Loss and Take Profit on the chart, but these will depend on how the entry setup forms, so I will update when we have a valid entry signal.
Stop Loss: We typically put a SL around the high / low of the entry area, though we might adjust based on market conditions such as high ATR ( average true range ) or long wicks.
Take Profit: We typically aim for at least a 2:1 RRR (risk reward ratio), but you can decide to take profits earlier, adjust stop loss as we get into profit, take partial profit, leave a small portion for larger gains, etc. How you want to manage depends on your own risk appetite and what you are comfortable with.
RISK MANAGEMENT / POSITION SIZING
Trading is a marathon, not a sprint. The key is to stay in the game long enough for long term probabilities to play out. Even strategies with 90%+ win rate will have losing trades, so if you go all in one every trade, eventually you will blow up your account. My recommendation is to dynamically change your position size based on the size of the stop loss so that you are risking 1-2% of your total account size on any given trade. This means that if you’re wrong and the trade hitting the stop loss, you lose 1-2% of your account. As an illustration, if your account balance is 1BTC, then the most you should lose on any given trade should be 0.01-0.02BTC. Notice that I didn’t mention leverage here. Because what leverage (3X, 5X,10X, etc.) doesn’t matter here. What matters is the position size that matches up with a 1-2% account balance risk.
HOW TO USE MY ANALYSIS
Every day I post potential areas of interest and trade setups based on the latest market conditions and market structure. Once price reaches one of the identified areas of interest and gives a valid entry signal, I will post the entry, along with stop loss and take profit levels, in real time. No hindsight 20/20 here. Everything is in real time for full transparency and so that you can actually enter the same trades that I'm entering. Some trades only give us a few minutes to enter, which is why it's imperative that you follow me so that you don't miss out. Below are two ways that you can use the analysis that I publish daily:
1. You can integrate my analysis into your own analysis, for example by using it as a starting point, or as confirmation of your own TA, or to identify potential trades for yourself.
2. You follow the trade setups and trade entry signals that I give in real time.
DISCLAIMER: I'M NOT A FINANCIAL ADVISOR AND THIS IS NOT FINANCIAL ADVICE, AND I WILL NOT BE RESPONSIBLE FOR YOUR WINS OR LOSSES, DYOR.
Please support me by liking, sharing, commenting, and following! Thanks!
MARKET OVERVIEW
- Price Action: Bitcoin established a new ATH @ 34.8K, then had a flash crash down to 28.1K. After a rapid bounce from 28.1K, price retraced to the 61.8 Fib retracement where it gave confirmation of a second leg up, and we are now nearing the ATH again in that second leg.
- Chart Patterns: No significantly visible chart patterns.
- Areas of Interest: The area(s) of interest for us are the highs @ 34.8K and the 200MAs @ $32.2-32.5K (in this specific case, if we were to test the 200MAs, I would prefer price to slowly come to it so that the 200MAs have time to become upwards sloping). Once price reaches one of our areas of interest and gives us a valid entry signal, I will update the trade, so make sure you follow me to get the trade entry signals in real time.
TRADES(S) RECAP: LATEST 3 TRADES
- 2020/ 01 /03: We had a winning trade! We entered long @ $33380, SL @ 32.8K, price reached a high of 33.8K, giving us a risk reward ratio of 1:1, meaning if you risked 1BTC on this trade, you could've made 1BTC. While this has been our smallest win so far following our biggest win, a win is a win. Always secure profits and protect your capital.
- 2020/ 01 /01: We had another winning trade! We entered long @ 29.1K, Stop Loss @ 28.8K, and priced reached a high of 33.3K, giving us a risk reward ratio of 14:1, meaning if you risked 1BTC on this trade, you could've made 14BTC! This is one of our biggest wins so far!
- 2020/ 01 /01: We had a winning trade! We entered short @ 29.3K, with a Stop Loss @ ~29.6K, and price reached a low of 28.6K, giving us a risk reward ratio of 2:1, meaning if you risked 1BTC on this trade, you could've made 2BTC. As this was a false breakout trade, we could've also entered a short on ETH, entered short @ $735, SL $743, price reached a low of $714, giving a risk reward ratio of 2.5:1, meaning if you risked 1BTC on this trade, you could've made 2.5BTC.
TRADE SETUPS
Below are the potential trade setups that I would be interested in trading. Regardless of the path that the price takes, I will be monitoring the market for a valid trade entry signal.
Long Trade Setup #1: Breakout and Continuation
To open a long position, we are waiting for price to break resistance, move back down to test previous resistance as support and then bounce back up.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of 34.8K with force, creating space between the price and 34.8K, falls back down to 34.8K and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle, a pinbar, or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
2.1 Ideally Engulfing / Break candle has a large candle body with small wicks
2.2 Ideally Engulfing /Break candle closes near the highs of the candle
3. Volume: Above average volume on the bullish engulfing candle, pinbar , or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
Long Trade Setup #2: Retest and Continuation (200MAs)
To open a long position, we are waiting for price to retrace back down to test the 200MAs and then continue moving up.
Trade Entry Confirmation:
1. Price Action: Price needs to move back down to the 200MAs, currently projected to be @ $32.2-32.5K by the time price reaches it, and bounce back up.
2. Candlestick Pattern: A bullish candlestick pattern such as a bullish engulfing candle, a pinbar, or a multiple candlestick breakdown (a large red candle followed by multiple green candles that eventually close above the open/high of the large red candle)
3. Volume: Above average volume on the bullish engulfing candle, pinbar, or on any of the multiple green candles that eventually break the red candle (ideally on the candle that breaks)
4. MACD: MACD histogram bottoming out, as indicated by the histogram becoming less negative (changing from red to pink)
NOTE: For the highest probability trades, price touches both the 200SMA and the 200EMA. If price only touches 1 of the 200MAs, the win probability decreases, and if price doesn't touch any of the 200MAs, the win probability is even lower. In a strongly trending market, the win probability for touching one or none of the 200MAs is higher than for a slow-moving market, but it is still higher risk.
Short Trade Setup #1: False Breakout
To open a short position, we are waiting for price to break above the horizontal resistance @ 34.8K and then fall back down.
Trade Entry Confirmation:
1. Price Action: Price breaks above the high of 34.8K and then rapidly falls below 34.8K, forming a bull trap
2. Candlestick Pattern: A breakout candlestick (candle close above 34.8K) followed by a breakdown candlestick (candle close below 34.8K)
2.1 Ideally breakout and breakdown candlesticks are consecutive candles, but can also have a few candles in between the two
2.2 Ideally the breakdown candle has a large candle body with very small wicks
3. Volume: Above average volume ( volume above the average volume line) on both breakout candle and breakdown candle, ideally the breakdown candle's volume is a local high
4. MACD: MACD histogram topping out, as indicated by the histogram becoming less positive (color changing from dark green to light green)
NOTE: For false breakout/false breakdown trade setups, sometimes trading the other pair (eg. trading BTC when the setup is on ETH and vice versa) can be even more profitable if the other pair is looking weaker (for false breakout setup) or stronger (for false breakdown). Some indicators to consider are where the price is relative to the 200MAs, size of recent candles, volume , and overall price action, market structure, and chart patterns.
ENTRY SIGNAL TYPES
Trade calls will be separated into two categories, official and unofficial. The reason for the distinction is that official entry calls are only for high probability trade setups whereas unofficial calls might have slightly lower probability of winning but positive net profitability due to high risk reward. As I see a lot of traders, do not practice proper risk management and position sizing, I want to protect them from the second type of trades. At the same time, I know there are more sophisticated traders who can take advantage of both types of calls. So this is the solution that I’ve come up with, which is to separate the two trade types into two types of entry calls. Official entry calls will come with detailed entry, stop loss and take profit levels, whereas unofficial trade entries might or might not and will rely a little bit more on the trader themselves to manage the trade. This is one way to distinguish the more experienced traders from the newer ones. If you are unable to enter an unofficial trade entry without those details, then it means that you shouldn’t be taking those trades and should stick only to the official trades.
1. Official entry calls will be posted using “trading active” post type.
2. Unofficial entry calls are potential good trading opportunities that will be posted using “comments” post type.
ENTRY CONFIRMATIONS
Ideally we get all confirmations for an entry, but sometimes we might take a trade when we have fewer confirmations. The more confirmations, the higher the win probability, though it also means you miss out on some profitable trades if you're only taking trades when we have all confirmations. It's up to your own risk appetite to decide when you feel comfortable entering a trade. You can also adjust position size based on level of conviction, entering a bigger position when there are more confirmations. Make sure you practice proper risk management and money management.
TRADE MANAGEMENT
I have put in preliminary Stop Loss and Take Profit on the chart, but these will depend on how the entry setup forms, so I will update when we have a valid entry signal.
Stop Loss: We typically put a SL around the high / low of the entry area, though we might adjust based on market conditions such as high ATR ( average true range ) or long wicks.
Take Profit: We typically aim for at least a 2:1 RRR (risk reward ratio), but you can decide to take profits earlier, adjust stop loss as we get into profit, take partial profit, leave a small portion for larger gains, etc. How you want to manage depends on your own risk appetite and what you are comfortable with.
RISK MANAGEMENT / POSITION SIZING
Trading is a marathon, not a sprint. The key is to stay in the game long enough for long term probabilities to play out. Even strategies with 90%+ win rate will have losing trades, so if you go all in one every trade, eventually you will blow up your account. My recommendation is to dynamically change your position size based on the size of the stop loss so that you are risking 1-2% of your total account size on any given trade. This means that if you’re wrong and the trade hitting the stop loss, you lose 1-2% of your account. As an illustration, if your account balance is 1BTC, then the most you should lose on any given trade should be 0.01-0.02BTC. Notice that I didn’t mention leverage here. Because what leverage (3X, 5X,10X, etc.) doesn’t matter here. What matters is the position size that matches up with a 1-2% account balance risk.
HOW TO USE MY ANALYSIS
Every day I post potential areas of interest and trade setups based on the latest market conditions and market structure. Once price reaches one of the identified areas of interest and gives a valid entry signal, I will post the entry, along with stop loss and take profit levels, in real time. No hindsight 20/20 here. Everything is in real time for full transparency and so that you can actually enter the same trades that I'm entering. Some trades only give us a few minutes to enter, which is why it's imperative that you follow me so that you don't miss out. Below are two ways that you can use the analysis that I publish daily:
1. You can integrate my analysis into your own analysis, for example by using it as a starting point, or as confirmation of your own TA, or to identify potential trades for yourself.
2. You follow the trade setups and trade entry signals that I give in real time.
DISCLAIMER: I'M NOT A FINANCIAL ADVISOR AND THIS IS NOT FINANCIAL ADVICE, AND I WILL NOT BE RESPONSIBLE FOR YOUR WINS OR LOSSES, DYOR.
Please support me by liking, sharing, commenting, and following! Thanks!
Trade active
Short @ 34860Note
Stop Loss: 35350TP: 34.1K, 33.5K, larger selloff
Note
has been a tough trade. price in slight profit for anyone who doesnt have the stomach for this volatility.Note
TP1 Reached!Note
Make sure youre securing profits by taking partial profits as we hit TPs and by moving stop loss up so that even if the trade turns against us, it will stop us out in profit/breakeven. congratulations to anyone who held through the rough ride, required a steel stomach.Note
TP2 Hit! Congratulations to all who took the trade. Hope you made some good profits!Trade closed: target reached
Trade Summary:We entered short @ 34.7K, with a Stop Loss @ ~35.3K, and price reached a low of 33.4K, giving us a risk reward ratio of 2:1, meaning if you risked 1BTC on this trade, you could've made 2BTC.
Make sure to follow if you want to follow future trades live!
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Youtube Video Analysis: youtube.com/channel/UCPwR8Rv2YVI7qZIhedX7pQw
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