I cleaned up the chart so I can explain few points. I have already traded the dip and I am out. I have noted the short trade price, stop loss price and the target price on the chart (for educational purposes only). If you want further information about this trade, please review the previously published ideas. Here are few points I want to explain:
1. No one can trade the absolute tops and bottoms. You always want to wait for confirmation before you enter a trade and you also want to exit before the trade changes direction and eat your profit. So, you will always enter and exit at different points other than tops and bottoms on the chart.
2. You can define your target prices in different ways. In my opinion, you should always use the same exact method and never change it in the short term. The one used in this trade is very simple. The target is 2 times the distance from trade price to stop loss. In other words, I am willing to lose X to win 2X. I can also trail my stop loss to protect he profit and maybe make more money, but I prefer a simple binary system.
3. All the support levels that I posted in the previous idea were basically to make sure that there is no strong level where the downward movement can be stopped before reaching my target price. I never intended to wait and see if the price will reach any of them. If there were any strong levels of support before the target price, I would not take the trade. You may choose to be riskier in your trading strategy.
There are multiple other strategies for position sizing and entry and exit rule and stop loss determination. I would suggest you study some of them and choose one that fits your personality.
Now, what is going on with Bitcoin.
You can see that there is a bearish engulfing candlestick pattern (marked with the big green and red arrows). There is no typical engulfing pattern when trading Cryptocurrencies basically because they trade 24/7 non-stop and the close of the previous candle is always the open of the next, but this is as close as it can be. The only thing is that there is no good volume behind the bearish candle which makes it weaker in my opinion. Most indicators are useless at this point. Some traders consider stochastic crossing below 50% is further confirmation of the downtrend (and they only enter at this point). At the time being, I am just watching and waiting for the next confluence of signs to enter another trade.
On the other hand, there is a possibility of forming head and shoulders pattern (see the green arcs on the chart). Head and shoulders pattern takes at least 1 month to form. Any shorter duration patterns are probably false. In BTC case, if the pattern forms, it will be around 6 weeks which is good. The thing is, you have to wait for a break up above the neckline with very very strong volume ( the volume is really important here). Generally, I prefer to see price closes above 11800 (previous high) in this case before I long.
happy trading. I'd love to hear your thoughts on this.
1. No one can trade the absolute tops and bottoms. You always want to wait for confirmation before you enter a trade and you also want to exit before the trade changes direction and eat your profit. So, you will always enter and exit at different points other than tops and bottoms on the chart.
2. You can define your target prices in different ways. In my opinion, you should always use the same exact method and never change it in the short term. The one used in this trade is very simple. The target is 2 times the distance from trade price to stop loss. In other words, I am willing to lose X to win 2X. I can also trail my stop loss to protect he profit and maybe make more money, but I prefer a simple binary system.
3. All the support levels that I posted in the previous idea were basically to make sure that there is no strong level where the downward movement can be stopped before reaching my target price. I never intended to wait and see if the price will reach any of them. If there were any strong levels of support before the target price, I would not take the trade. You may choose to be riskier in your trading strategy.
There are multiple other strategies for position sizing and entry and exit rule and stop loss determination. I would suggest you study some of them and choose one that fits your personality.
Now, what is going on with Bitcoin.
You can see that there is a bearish engulfing candlestick pattern (marked with the big green and red arrows). There is no typical engulfing pattern when trading Cryptocurrencies basically because they trade 24/7 non-stop and the close of the previous candle is always the open of the next, but this is as close as it can be. The only thing is that there is no good volume behind the bearish candle which makes it weaker in my opinion. Most indicators are useless at this point. Some traders consider stochastic crossing below 50% is further confirmation of the downtrend (and they only enter at this point). At the time being, I am just watching and waiting for the next confluence of signs to enter another trade.
On the other hand, there is a possibility of forming head and shoulders pattern (see the green arcs on the chart). Head and shoulders pattern takes at least 1 month to form. Any shorter duration patterns are probably false. In BTC case, if the pattern forms, it will be around 6 weeks which is good. The thing is, you have to wait for a break up above the neckline with very very strong volume ( the volume is really important here). Generally, I prefer to see price closes above 11800 (previous high) in this case before I long.
happy trading. I'd love to hear your thoughts on this.