February 7, 2025 Bitcoin Market Review:
Like the previous day, there are reversals up and down within the oscillation range, big up, big down, big confusion, which is a typical oscillation range. Trading at a slightly larger level yields no good results for either side; however, shifting the perspective to intraday reveals four long opportunities and three short opportunities.
On February 6th, as the daily closing approached, the price stopped falling and formed a slight range until the 8th candlestick on February 7th, which was a large bullish candle breaking out of the narrow range. You can enter a long position using a buy stop order, with the initial stop loss placed below the range. In hindsight, the breakout was not successful, but with background support, the signal remains valid, making it a good entry signal. If you place a breakout order, it will be executed at the 19th candlestick, and looking back, the consecutive bearish candles closing below the moving average allowed for a small loss exit.
Up until the 37th candlestick, a full-bodied bullish candle closed above the EMA. Entering a long position with a buy stop order and placing the stop loss below the 27th candlestick (which in hindsight is below the channel) allows for a good swing trading opportunity. By the 45th candlestick, it can be generally judged that the price is rising within a narrow channel. As long as the narrow channel has not been broken, enter long for any reason. While it may not be a swing trade, it can certainly be a scalp.
At 9:30 AM Beijing time, data was released, causing a spike in market volatility, testing the previous day's highs. However, the second segment of traps often occurs within the range, as there are not many trading opportunities. The opposing side often lacks strength until the price reaches the range boundary. Additionally, such upward movements are typically parabolic and unsustainable. After reaching the bullish target, profit-taking leads to market stagnation and decline. The result shows that the upward breakout of the range lacked good follow-through and was reversed downward, just as mentioned in yesterday's post—80% of breakouts in a range fail.
The 61st candlestick is a large bearish candle after a failed upward breakout, serving as a very good entry signal for shorting. Place a sell stop order below it to enter a short position, with background support signals also being perfect, making it easy to seize a shorting opportunity. If you're hesitant to short, seeing the 64th candlestick, you can also sell short below it since it is an engulfing bearish candle, indicating a failure of the bulls to push upward, resulting in a downward breakout while closing below the EMA20. These two signals were the most perfect shorting signals for the previous day's trading. Moving on to the 76th candlestick, the price rebounded to the EMA20 without any bullish follow-up, instead closing as a full-bodied bearish candle. Entering a short position below it with a sell stop increases the win rate, although the risk-reward ratio is not as favorable as the previous two signals.
The subsequent market trend is a continuous decline, essentially due to no bulls willing to buy within the range until reaching close to yesterday's low, where the bears hit their target and began to close positions, causing a rebound. Aggressive bulls start to build positions to try and go long, which is when the price finally stops falling. It's worth mentioning that the 93rd candlestick is also a valid long entry signal, as bulls repeatedly pushed the candles to close with little to no upper shadow. The 93rd and 94th candlesticks are consecutive bullish candles closing at the bottom of the range, making it a reasonable choice to go long at this position.
Some people might find it hard to identify breakouts on a 15-minute chart, so looking at one-hour or two-hour charts is also acceptable. The ratio of market depth to the number of candlesticks and the length of the range is important. In the best case for viewing candlesticks within a range: the number of candlesticks at the current time level within the range should be around 60-120. At this point, observing the candlesticks within the range can filter out the noise from lower time periods.
The word count exceeded too much, so I can only post an article. Let me share the experiences and lessons from my entry yesterday: when Bitcoin entered a narrow channel, I noticed Ethereum's price had already risen above the moving average with consecutive bullish candles, so I always stayed in long and entered a long position. However, during the data release, I ended up exiting at a small loss (indicated by the arrow in the image). Later, I traded LINK and took a long position in Bitcoin, resulting in three stop losses. Following that, I took a short position in Bitcoin, executed at the 70th candlestick in the first image, and held it until closing at the 84th candlestick. Overall, it was still a losing day. I want to use my losing experience to warn everyone: only hold one asset, one position, and one direction at a time. Holding multiple assets and positions essentially adds leverage to oneself. Holding multiple directions increases uncertainty. If only one direction is traded, losses will only occur when the market completely contradicts the expectations. Holding both long and short positions creates confusion: if a long position is opened, should the short position be closed?
This concludes today's share. Today's share is a bit long; thank you for reading this far. Wishing you successful trading.
