There are a lot of people 'short-term bearish' but 'long-term' bullish. This means that a lot people expect further downside before the market moves up again. How do you know when we have the reversal to the 'long-term' bullish phase? This is an easy answer, look at the price action. How to read the price action then I hear you ask, valid question. Look at the swings in the price: we make a low, we create a high, we create a low that is lower than the previous low and a high that is lower than the previous high. This means we are in a clear downtrend. Now you see the making a higher high than the previous high, which is gained by closing a full body above the previous high preferably on a high timeframe. Now there are two options, you wait until we create a lower low, and wait on a higher high to long a pullback or you can take somewhat higher risk and look for a long after the gain.
What does this mean for Bitcoin?
We have been creating lower highs and lower lows. We have determined that we are in a downtrend, so we look for shorts. Once we create a higher high above the previous high, I look for pullback plays. One thing the price has to do is opening and closing above the important white line on the chart. Then we can look for a pullback to enter a long, I do this with a Fibonacci, trendline and horizontal levels where I look for confluence. For example on the chart there is confluence with a fib level (0.618), the trendline and a horizontal support. If this happens then I will enter a long with the stoploss under the previous low. If this does not happen we chance the plan following the steps above to look for another reversal in later time.
What does this mean for Bitcoin?
We have been creating lower highs and lower lows. We have determined that we are in a downtrend, so we look for shorts. Once we create a higher high above the previous high, I look for pullback plays. One thing the price has to do is opening and closing above the important white line on the chart. Then we can look for a pullback to enter a long, I do this with a Fibonacci, trendline and horizontal levels where I look for confluence. For example on the chart there is confluence with a fib level (0.618), the trendline and a horizontal support. If this happens then I will enter a long with the stoploss under the previous low. If this does not happen we chance the plan following the steps above to look for another reversal in later time.