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The indicator entered us short BTC/USD, where do we get out?
Atualizado
The daily short setup the indicator gave us in our last Bitcoin idea triggered a short trade which we are still in (3). It’s the first trade the indicator entered us in since the end of August on bitcoin. The trade setups (1) and (2) missed the trigger level by just a tick. You may have been triggered here, in that case you took two small losses of less than 2%, which is reasonable :)
Now let’s look at managing this short trade: finding areas of interest and looking for the indicator signals at those levels.
First of all, the indicator hasn't shown any exhaustion signals, so we should be still good on momentum to the downside.
However, we've dropped violently and are reaching a support zone which I’ve talked about before (4). It’s the area between 5000 and 4500, taken from the untested high of September last year.
What we look for are exhaustion signals in or around that area, and reversal candles. According to the strategy we tighten the stop loss when we see those. The indicator still shows the technical stop loss at (5), but as the move down was quite violent, and the candles being quite overextended it’s smart to move the stop down to either swing high (6) or if you;re even more cautious to the middle of todays big candle (7). Remember, you can always re-enter a position, managing the risk is more important than exiting at the absolute maximum profit.
The indicator plotted a new short setup (8) which was triggered today. It’s not a trade I took, as I was in short already, but it is a signal, which definitely could have been taken. The stop loss for that entry is at the prior swing high (6).
From here a number of things can happen, and although there are differences in probabilities, we have to keep in mind that markets are inherently unpredictable. The mindset of a trader should not be having a scenario or prediction of what may happen, and hoping that that scenario will come true (or holding on to that prediction for dear life...). Rather, you should want be mindful of the different scenarios, and have a game plan for all of them. Every new candle gives you new information to base your decision on, use it!
In this case we have an area which we suspect the market should reach. But again, anything can happen so here’s the plan:
If we go down the the support level (4), we wait for the indicator to signal overextension and look for reversal candles to lower the stop loss to the top of the candle (as per the strategy).
Then we re-evaluate and wait for the market and indicator to show us a new trade.
If the market reaches (4) but crashes through, we’ll still be in the short. We’ll move the stop loss down according to the levels the indicator plots. And perhaps we will get a re-entry signal on the way down to reinforce the position.
If the markets decides to reverse from here we have our stop loss at either (6) or (7). We’ll be stopped out, and re-evaluate, waiting for the indicator to show us new trade opportunities.
If we move sideways, same thing: we either get stopped out and re-evaluate, or we remain in our short until the market hits our stop loss or moves down to the support area.
We have our plan set out, so now it’s the market turn to make it’s move…
Like and subscribe if you enjoy our work!
If you want to try our indicator out, follow us and drop a comment or pm and we’ll get you set up.
More information on our indicator can be found below:
Stay calm, and happy trading!
Now let’s look at managing this short trade: finding areas of interest and looking for the indicator signals at those levels.
First of all, the indicator hasn't shown any exhaustion signals, so we should be still good on momentum to the downside.
However, we've dropped violently and are reaching a support zone which I’ve talked about before (4). It’s the area between 5000 and 4500, taken from the untested high of September last year.
What we look for are exhaustion signals in or around that area, and reversal candles. According to the strategy we tighten the stop loss when we see those. The indicator still shows the technical stop loss at (5), but as the move down was quite violent, and the candles being quite overextended it’s smart to move the stop down to either swing high (6) or if you;re even more cautious to the middle of todays big candle (7). Remember, you can always re-enter a position, managing the risk is more important than exiting at the absolute maximum profit.
The indicator plotted a new short setup (8) which was triggered today. It’s not a trade I took, as I was in short already, but it is a signal, which definitely could have been taken. The stop loss for that entry is at the prior swing high (6).
From here a number of things can happen, and although there are differences in probabilities, we have to keep in mind that markets are inherently unpredictable. The mindset of a trader should not be having a scenario or prediction of what may happen, and hoping that that scenario will come true (or holding on to that prediction for dear life...). Rather, you should want be mindful of the different scenarios, and have a game plan for all of them. Every new candle gives you new information to base your decision on, use it!
In this case we have an area which we suspect the market should reach. But again, anything can happen so here’s the plan:
If we go down the the support level (4), we wait for the indicator to signal overextension and look for reversal candles to lower the stop loss to the top of the candle (as per the strategy).
Then we re-evaluate and wait for the market and indicator to show us a new trade.
If the market reaches (4) but crashes through, we’ll still be in the short. We’ll move the stop loss down according to the levels the indicator plots. And perhaps we will get a re-entry signal on the way down to reinforce the position.
If the markets decides to reverse from here we have our stop loss at either (6) or (7). We’ll be stopped out, and re-evaluate, waiting for the indicator to show us new trade opportunities.
If we move sideways, same thing: we either get stopped out and re-evaluate, or we remain in our short until the market hits our stop loss or moves down to the support area.
We have our plan set out, so now it’s the market turn to make it’s move…
Like and subscribe if you enjoy our work!
If you want to try our indicator out, follow us and drop a comment or pm and we’ll get you set up.
More information on our indicator can be found below:
Stay calm, and happy trading!
Nota
The market fell through the support zone of around 4500, and the indicator printed overextension signals (1). Stop loss moved down to the top of todays forming candle because of 3 reasons:
First, the overextension signal from the indicator combined with todays forming reversal candle.
Second, the large distance between price and the trendcloud (taken from ichimoku) and the flatness of the trend cloud (2).
Thirdly, everyone is too scared for price to fall further. Counter-sentiment thinking is often a very helpful tool in crypto trading, because.. well for obvious reasons..
I don't think that this is the bottom, I think we need to test the levels I was looking at in August (linked below), round the 3000 area and possibly down to around 1300. For the shorter term I think there's room for a short term bounce up (so that the whole space believes that this is the bottom, just like 6000 was the bottom) before we eventually bottom out.
These are also the reasons why I'm looking at a short term countertrend bullish trade. I'll post that setup later
Nota
Short still active. In the idea linked below we're looking for a countertrend long setup already.At the entry level of the long trade: close short, adjust position size, open long position.
Nota
The market is starting to fall again, let's see if this takes us any lower or is just a bear trap. In any case, the plan still stands:Still in a short trade, stop loss is slightly above yesterdays candle.
If price moves there, the short is closed and the long position entered.
Nota
We're making new lows, the long setup is off the table and we're back to finding an exit for the short we're in. Stop loss remains where it is at the moment, above yesterdays doji. Let's see if we'll make it down to 3000 in one shot, or if we'll see a (small?) bounce around 3500.
Watch the indicators overextension signals, and wait for tomorrows candle. We'll probably be able to lower the stop loss.
Nota
We seem to have some kind of bounce of the 3500 area. We;ve been overextended for some while, so let's see what happens. We might be able to take a second look at the long setup that I've cancelled yesterday, depending on what price does. As always, re-evaluate, re-evaluate. re-evaluate..Stop loss moved down the middle of yesterdays large candle.
Trade fechado: stop atingido
Trade closed at 4020 - 36% profit.
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