Shorting BTC is Dangerous, So I Went Long at $6.9K

This has been a combined week, with some small features and losses on Bitcoin (BTC) longs and small earnings on alt trades which I’ll focus on within the coming weeks. I want to take this chance to elucidate just a few issues about my buying and selling model and method basically, as it may be complicated for a lot of.

First, I don’t quick Bitcoin. This isn’t as a result of I’ve no need to search for quick positions, however as a result of I’m American and can’t legally commerce on leverage exchanges that supply Bitcoin shorts. The one change the place I can legally quick is Kraken, which is infamous for big wicks on candles that don’t exist on different exchanges. I can’t commerce anyplace that my danger administration technique can’t be correctly executed – so lengthy wicks that cease out merchants who would in any other case be effective elsewhere will not be acceptable for me.

That mentioned, I solely search for lengthy entries, which isn’t a really perfect state of affairs, because it forces me to commerce in opposition to the pattern after I need to enter a place. I’m comfy with this as a result of I’ve a confirmed and well-defined buying and selling system. It permits me to take many small losses, compensated for by a few giant features a 12 months.

This works for me however is unlikely to work for an additional dealer who doesn’t totally perceive my state of affairs and system. To that finish, no person ought to copy my trades, or anybody else’s. The accountability to develop and enact a system is yours, and your system will probably be a results of your individual monetary state of affairs, timeline, and expectations.

It is usually vital to notice that I solely commerce with a small share of my total portfolio. I solely commerce 15% of the funds allotted to my crypto portfolio and my complete crypto allocation represents solely 10% of my total funding portfolio. As I typically say, I plan my losses, anticipating a few of the trades I make to go in opposition to me. As such, I’m comfy dropping my total buying and selling portfolio, and it will not have any impact on my life. That’s my system.

I’d additionally prefer to drop a fast be aware about longing and shorting cryptocurrencies. In my view, longing is doubtlessly way more worthwhile and fewer dangerous than going quick on Bitcoin, or some other asset. I lately tweeted about this and was a bit shocked on the lack of expertise of this idea amongst merchants which are actively shorting with leverage.

On the core, a zero leverage quick’s most incomes potential is 100% if the asset goes to zero. You can not do higher than doubling your cash. The theoretical upside of a protracted place is infinite. That’s the reason a brief from the Bitcoin prime at $20,000 the entire solution to the low of $three,200 was much less worthwhile than a easy lengthy from $three,200 again to $6,400. Learners mustn’t quick, they need to purchase dips in an upward trending market.

Replace on the Bitcoin place

As mentioned within the final journal entry, I opened a Bitcoin place at $eight,375. The worth rose instantly, in order I normally do, I moved my cease loss up. I ended up stopping out at my entry value and broke even.

I additionally took one other place as value continued down, at $eight,010. Worth retraced to the 78.6% Fibonacci degree, a really deep retracement relative to earlier corrections. This appeared like an affordable place for a bounce. There have been additionally clear bullish divergences on all time frames from 6 hours down, which in the end failed.

BTC USD Four hour chart. Supply: TradingView

Probably the most compelling cause for a protracted place on this space was the potential “bullish breaker” proven in pink. This was an space of provide that was blown via in a single candle. These zones are sometimes retested as assist – often known as a bullish breaker when they’re profitable. I ended out when the value failed to carry this degree, at $7,900 for a place lack of roughly 1.Four%.

BTC USD 6 hour chart. Source: TradingView

BTC USD 6 hour chart. Supply: TradingView

I took one other Bitcoin place at $7,420 when the value arrived on the subsequent zone that I had outlined. It did so in spectacular vogue, successfully going from zone to zone in a single Four-hour candle. I instantly moved my cease loss as much as $7,500 when the value crossed $7,600. I quickly stopped out with a small revenue of 1%.

BTC USD 4 hour chart. Source: TradingView

BTC USD Four hour chart. Supply: TradingView

I’m presently lengthy Bitcoin as soon as once more from $6,900. The Relative Power Index (RSI) on the Four-hour chart is at historic lows, touching 6.02 at present earlier than rising barely. That is essentially the most oversold that Bitcoin has been this complete 12 months as nicely, so I view it as a really seemingly place for at the least a reduction bounce.

BTC USD 4 hour RSI. Source: TradingView

BTC USD Four hour RSI. Supply: TradingView

The each day RSI has additionally turn out to be oversold. That doesn’t imply that value will bounce now, but it surely does imply that ultimately, RSI ought to journey again to overbought, taking the value with it.

BTC USD daily RSI. Source: TradingView

BTC USD each day RSI. Supply: TradingView

I’ve already closed half of my lengthy place at $7,350, the primary key resistance that should flip for the potential reversal to proceed. I’ll let the remainder experience for now.

BTC USD 6 hour chart. Source: TradingView

BTC USD 6 hour chart. Supply: TradingView

Further trades:

I stay in my place on Concord (ONE). I additionally nonetheless maintain positions in Dogecoin (DOGE) and Holo (HOT), which I’ll replace when the value motion particulars such an replace as related. I’ve lately taken a brand new place in REN (REN), based mostly merely on a confluence of horizontal and ascending assist and a bullish divergence on the Four-hour chart. I’ll replace this because it progresses.

REN BTC 4 hour chart. Source: TradingView

REN BTC Four hour chart. Supply: TradingView

REN BTC daily chart. Source: TradingView

REN BTC each day chart. Supply: TradingView

The views and opinions expressed listed below are solely these of the (@scottmelker) and don’t essentially replicate the views of Cointelegraph. Each funding and buying and selling transfer entails danger. It is best to conduct your individual analysis when making a choice.

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