When markets go down sharply, like the fast drop in BTC after the Coincheck hack, they tend to pullback and eradicate any losses in the following 24 hours.
But even if you know and expect this, you have to follow price action rules and wait for long entries.
How could that be achieved in this case?
1) Why was the market starting its pullback at 10.300-400 levels and not go down and test the 10k supports, as a lot of people expected (myself included)?
BTC is moving in a broad range, which is a slightly upward pointing channel. The lower line did run at the 10400 level, providing support.
Another factor may be that when everyone is expecting something, like testing 10k or fall below that, it is not going to happen ;)
2) How to enter with a long position to profit from the pullback?
The first long entry I marked is a failed second entry short, which squeezed a lot of shorts out. This is probably why it spiked sharply up (first leg), thereby retracing nearly all the loses from the fall.
This spike was way to steep, so you would expect a correction to the downside.
It is difficult to decide where to enter long in such a correction, so my second marked entry long is at the small breakout level (10750) from the first spike up.
This is where a lot of traders would place their break even stops if they got long above that breakout. BTC did make a bullish candle at this point which could lead to the expectation of a second leg up.
Right now BTC has established a spike and channel formation, which is just a upward pointing channel after a spike up.
But even if you know and expect this, you have to follow price action rules and wait for long entries.
How could that be achieved in this case?
1) Why was the market starting its pullback at 10.300-400 levels and not go down and test the 10k supports, as a lot of people expected (myself included)?
BTC is moving in a broad range, which is a slightly upward pointing channel. The lower line did run at the 10400 level, providing support.
Another factor may be that when everyone is expecting something, like testing 10k or fall below that, it is not going to happen ;)
2) How to enter with a long position to profit from the pullback?
The first long entry I marked is a failed second entry short, which squeezed a lot of shorts out. This is probably why it spiked sharply up (first leg), thereby retracing nearly all the loses from the fall.
This spike was way to steep, so you would expect a correction to the downside.
It is difficult to decide where to enter long in such a correction, so my second marked entry long is at the small breakout level (10750) from the first spike up.
This is where a lot of traders would place their break even stops if they got long above that breakout. BTC did make a bullish candle at this point which could lead to the expectation of a second leg up.
Right now BTC has established a spike and channel formation, which is just a upward pointing channel after a spike up.
