Point of this thread is to emphasis the importance of day trading futures or at least paper trading it if you’re unfamiliar. It is also to get you guys thinking in terms of probability and as a passive trader. It's not about how being right or wrong. It's about taking the best trades you can while minimizing unnesccary risk during market volatility. The commentary provided below applies to all types of markets and for intra-day trading, as well. Futures market, at least from my experience, is where bad trading practices are often realized sooner than other markets. So if you are a pro/prop future day trader, you know trading something like bitcoin can be very straight forward and you find “sniping” entries much easier.
My goal by the end of this thread is provide some sense of hope and optimism in a sense where anyone has the ability to read a chart. Trading takes practice, but if you know the rules of the basketball game, you can at least practice the right way; you can then bend those rules in your favor so you can become a successful player.
Today, I want to talk about bitcoin’s price action since November of 2021 to today. I will not talk in debt from a TA perspective since I’m working write up that is much more intuitive with quizzes and such. Anyhow let’s begin with the commentary!
November 16th 2020, BTC tested 57.6K on daily. I said it can’t close below that region, because it invalidates any long plays above 57.6K since it’s the lowest price point BTC attempted before making a new ATH around ~69k. So far this should be simple.
What do I mean when I say “closed/s below/above”? Essentially what it means.
So this tells me several things: if BTC does close below 57.6K, I should be worried if I have any long positions open. If BTC doesn’t close below, I should not be shorting anytime soon. This is what it tells me. This also tells me that I need to be ready for a possible long or short depending on what price action does next.
November 20th 2020, BTC closes below 57.6K on daily. Okay now it tells me some a bit more. Through back testing this “concept”, I am aware that the odds of BTC closing below 57.6K is significantly higher in the future than making a new ATH. Wow, that’s powerful information to have. Wouldn’t you agree? So then, wouldn’t it be wiser to get out of longs and look for shorts now? I thought so too.
So I decided to go short at a level (59.5K) in my playbook I call “HOLT”. Okay, holdup, what the fuck do you mean by a HOLT level? It essentially means “high of leg top”.
Warned some twitter followers and how the bulls kept on retesting but they kept being rejected with a lot of liquidity provided from sellers as shown by how it wicks right off. Now if we tested for the 3rd time and it was rejected hard, wouldn’t you agree that short plays definitely look much more optimistic compared to when BTC just closed below 57.6K? If you answered yes in your head, you better have a good reason.
Not too long ago I said that through back testing this “concept”, I am aware that the odd of BTC closing below 57.6K is significantly higher in the future than making a new ATH”. So why was I confident enough to go short? It has nothing to do with HOLT or anything specific. It’s a combination of information gathered over a period of time that led me to confirm that we will have a higher degree of one event happening over another. What was that missing information that pulled the short trigger? In the free trading course, this would be under multiple time-frame analysis chapters. In order words, I simply just zoomed out. A simple weekly candle stick told me to go short. Course will cover what a candlestick can mean aside from what's already known the general trader. When you have both higher and lower timeframe in sync, you better listen to them. Now the probability of a short play occurring is even higher than before. We see that on the weekly chart.
December 1st 2020, I made a bold prediction of this BTC move happening. 3 days later, we see the shorts paying off big time. Not only did we hit my first PT at 52K, but we also hit my second PT target (43K) where I also had buy limit orders synced up with alt coins. You will just have to take my word on that.
Now refer back to this this figure for a second. I want you guys to think critically here: what part of the leg structure did BTC test when it hit 43K? What does that tell me? If BTC bounces back up, how far would you expect BTC to go up before bulls are back in control? And why? If shorts were to remain control, what should we look out for? Where should we see price action close below or above? These are the questions I ask myself every time I trade futures market. I trade based on information already provided. I highly suggest googling “information vs. opportunity” in the world of trading.
Okay let’s fast-forward a bit. BTC is above 47.3K and it’s a good sign so far for bulls since we havnt closed below it, yet. Simply because, I think that as long BTC is close to 50K region and trades above 47.3K, we at least have a chance to revisit our “HOLT” level. Which is tested 3 times and we then can talk about higher levels once we see how 59.5K level reacts. Ah, so then if you caught a long when BTC dropped at 43K, congrats. You should be now thinking where to take profits. Or if you missed out on a short, and odds are still in your favor of a bearish market on LTF, then you need to consider when to get in.
December 10th 2020, we see BTC close below 47.3K. Déjà vu After several days, we see BTC just going sideways. We see it close below and above 47.3K. People that want to get into a short are confused and scared. People that are long are worried that it’s closed below 47.3K several times. But man, it’s been several days and I need to make a trade.
December 10th we see bullish divergence forming on LTF.
December 18th, I post a good level for longs to take profits and for shorts to enter (~51.9K) Price action is sideways now. During the entire Christmas week, we start to see a bearish divergence occurring on LTF. We are also losing bullish momentum on a higher frame. Okay, so it’s déjà vu all over again.
December 28th, we see 47.3K tested. Keep in mind, this level has been tested a lot. So the odd of price action holding it on another retry seems lower than it not occurring. With HTF and LTF in sync again, is it safe to assume there’s a significantly greater probability of price action revisiting 43K? Yes.
Today. Remember 43K is tested already.
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