BTC → Bitcoin Blasts Through Resistance Then Falls Down. Short?
Bitcoin completed its measured move on January 7th and gave us some extra price action up to the $49,000 area. With a strong sell signal and now a follow-through bar reaching the Daily 30EMA, is it time to short?
How do we trade this? 🤔
To justify a short trade, we need a Daily candle close below the 30EMA. The other data points all support a counter-trend trade: Measured Move Complete, Strong sell signal above key resistance area, RSI below the moving average around 50.00 with room to fall.
I frequently reference the 4HR chart when trading the Daily timeframe. As you can see in the chart below, the 200EMA on the 4HR chart overlaps with the 30EMA on the Daily chart. Using that same point of reference as a key support level, we can look for a close below the 4HR 200EMA to justify our short. That also allows us to get an earlier entry into the position:
Once we get that candle, we can justify a short scalp to the previous trading range/measured move mid-support at a 1:1 Risk/Reward Ratio.
💡 Trade Idea 💡
Short Entry: $42,650
🟥 Stop Loss: $46,950
✅ Take Profit: $38,350
⚖️ Risk/Reward Ratio: 1:1
🔑 Key Takeaways 🔑
1. Measured Move Completed Into Key Resistance Area.
2. Strong Sell Signal Above Measured Move Resistance.
3. Strong Sell bar falling to 30EMA
4. Wait for Daily Candle to Close below 30EMA.
5. RSI at 50.00 and below Moving Average.
💰 Trading Tip 💰
There is over a 60% chance of a measured move after the breakout of major resistance, normally, a trading range. That means the distance from the trading range resistance to the top of the breakout will happen again above the top of the breakout.
⚠️ Risk Warning! ⚠️
Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
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