Short Sell In A Downtrend - Ep 17




Market Analysis


While Bitcoin is trading on the upside, Altcoins are under pressure, and that provides the opportunity for short sell in a downtrend the coins that are currently weaker.

Looking at the BTC chart, we can see that we had two false breakouts over the resistance level of $13,223. One of the breakouts was minor, while the second was much more robust, reaching the resistance level of $13,800, before reversing and finding double support on the $13,223 level and the MA50.

Currently, the key support levels are $11,200 and $11,000 in the event of a reversal. If we do not breach these support levels, we anticipate that Bitcoin will continue to be Bullish. It is vital to note that we have reached a point where we have more support levels than we do resistance, indicating a very bullish scenario.

One of the main factors that influence Bitcoin’s price is the correlation it has with the S&P 500. To examine this, we have plotted a chart with BTC against the price of the S&P 500. Analysis of how the price of bitcoin acts compared to the S&P price shows that in early March, both were moving closely in tandem. However, three weeks ago, this changed. We see that as a clear downtrend began for the S&P, the price of bitcoin entered into consolidation, followed by a breakout on the upside as the S&P was entering a sharp downtrend. This trend can be temporary. In the short term, if we see a large dip in the S&P price, we anticipate that this will affect the price of BTC negatively.



Bitcoin diverging from equities
Bitcoin diverging from equities

One of the coins that is looking weaker in the short term is REN. Looking at the graph of REN/USDT, we see that the price has broken out on the downside of the trend line, unlike Bitcoin. On a 15 minute timeframe, we see that the price is constantly retesting the MA50 on a 15-minute timeframe. We anticipate that the tradeoff is occurring on the downside and not on the upside, so it could be a good opportunity to short sell in a downtrend REN.

How to build a suitable strategy


To capitalize on this, we have created a rule to short sell in a downtrend 50 contracts of RENUSDT if the MA 50 is greater than the price. We have a take profit set at 2% and a stop-loss at 3%. It is always important to incorporate a stop-loss in any rule that trades futures.



Short selling in a downtrend
Short selling in a downtrend



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