In-Depth Technical Analysis on BTC/USD with two Trade Plans

Trading-Guru reporting for duty again. In this idea I will do a full technical analysis and go through all the recent events on BTC/USD and explain how you can leverage this to prepare for your next trade.

Hey everyone, I'm back! Since the markets didn't move much recently, I decided to take some time working on the bigger projects I still have in the pipeline.

I am going to publish some really high quality trading guides completely for free and have started a redesign of my website. Follow me here on Tradingview or on the scanner pages on Telegram and keep an eye on my profile to learn where and how to access these!

Without further ado, we see some very interesting behavior here on BTC/USD. Multiple times over the price has suddenly spiked, after which the prices have quickly returned to their original positions.

After talking with many other great technical analysts in order to try and understand this, we came to the conclusion that the recent increase in popularity on Futures trading has a big effect on the price stability.

You can see historically that after futures trading (and therefore the ability to go short as well) is introduced to an asset that the volatility reduces.

Right now, the legacy markets have stopped their long uptrend and are looking for a new direction. BTC being very correlated to legacy markets since the Corona Crisis also suffers a bit from this. A temporary high has been printed and the price is searching for new grounds.

If we look at the most recent 10% drop we see it happened slowly and steadily, without a sudden volatility like the other spikes. This one resulted in a more sustainable drop and therefore didn't recover.

I want to suggest two scenarios for trading.

Scenario 1: Mean Reversal.
If a sudden direction is shown and a spike in volatility happens again, I expect that the price will quickly revert to the mean again. Therefore, if the price breaks upwards, I suggest you enter a short position towards the place where the price came from. Similarly for the other way around, if the price breaks downwards suddenly, enter a long position and try to exit where the price started.

Scenario 1: New Direction.
When the price starts moving, but with slow and dedicated candles, I expect that the price will show it's new momentum. In this case, I would suggest to trade along with the price move and place a long when it goes up, or a short when it goes down. If you look at the 1h I'd say you need to see the movement at least over 5-7 candles before confirming this direction.

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Disclaimer!
This post does not provide financial advice. It is for educational purposes only!