We’ve seen some major weakness in the cryptocurrency markets in the past couple weeks. Bitcoin has recently broken a major support level on the daily chart after failing to breakout above the $11,000’s resistance level. We can see that the failure to hold the previous low from the End of February is a big sign more downside may be in store for Bitcoin at the moment:
Our Bitcoin Short
Once we saw the break of the 9000 support level we knew that Bitcoin would likely have some downside coming in the ensuing weeks. We immediately were on high watch for a setup to get short Bitcoin under the 9000 level. Here is one of the shorts we took in Bitcoin on March 14th:
What made this Bitcoin short so great is the timing of it on the daily chart. We can see on the daily that Bitcoin broke the 9000 level support level on March 8th. It flushed lower the next day, but then quickly reversed to retest the breakdown level. It is very common in cryptocurrencies for cryptos to retest key breakout or breakdown levels after breaking them.
Once we saw it retest and fail to hold that 9000 level, it gave us even more conviction to the short side. Once we got some sideways consolidation in the form of a bear flag to manage our risk, we took the short in Bitcoin. Remember that you always need an intraday setup to manage your risk when you are looking for a daytrade. Chasing weakness in cryptocurrencies can cause you to get poor entries and result in much smaller profits and bigger losses.
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Kunal Desai is an American day trader (stocks and cryptos) and founder of Bulls on Wall Street and Bulls on Crypto Street, two online trading academies and informational publications. He has been featured in many high profile publications like Inc, Forbes, Buzzfeed, and Fortune. He has spoke at trading and business events all across the World.