How Do You Trade a Bitcoin Downtrend
A down bitcoin trend means prices keep falling on the chart. For BTCUSD and other cryptos, closes stay below opens most of the time.
Trading a downward Bitcoin trend involves utilizing the trend direction to open sell positions on Bitcoin trades.
Drawing a Downward Bitcoin Trend Line
When learning the process of charting a declining Bitcoin trend line, it is crucial to recognize that a bearish BTC/USD market consistently generates lower peaks and lower troughs, thereby establishing a prevailing downward trajectory for Bitcoin - a descending cryptocurrency trend. These specific plotted coordinates are what are utilized to construct the downward Bitcoin trend line.
To draw a bitcoin trend that's going down, we use areas where the price has trouble going higher, and we need two of these areas to do it right. When the bitcoin price touches this downward bitcoin trend line, we start transactions to sell cryptocurrency and place a stop loss order just a little bit above the sloping resistance lines.
How to Trade a Downtrend? - Strategy for Trading/Transacting a Bitcoin Downwards Trend
Trading This Down Bitcoin Trend Market Move
When trading with this bitcoin downtrend method, this setup for a falling bitcoin trend will show the market's general direction as going down, so bitcoin traders will only start trades to sell cryptocurrency short. These resistance levels are the levels where, if the bitcoin price goes back up, these points will give strong resistance. This is why many sellers will wait until the bitcoin price goes back up and reaches these retracement levels to start trades to sell cryptocurrency. Trades started at these technical levels have a high Reward : Risk Ratio and have little loss.
For instance, in the previously mentioned declining bitcoin trend scenario, a trader would have executed short sell signals for bitcoin at resistance levels 1, 2, and 3, and these cryptocurrency sell transactions would have been initiated with minimal drawdown or retracement.
How to Draw a Down-wards Bitcoin Channel
Plot a downward channel with a line parallel to the bitcoin trendline. Shift it to hit the bottom of bitcoin price swings. This sets up the channel. As long as bitcoin price stays inside both lines, the bearish trend holds and moves lower.
How Do I Draw Downward Channel - Crypto Downward Trend Method
Trading the Downwards Bitcoin Channel
The downward channel is utilized by cryptocurrency speculators to indicate levels where it is optimal to place profit-taking orders. Traders will secure some gain once the bitcoin valuation touches the lower channel or the lower channel boundary and await an additional pullback before initiating a short sell bitcoin trade once more.
Obtain Further Instructional Material & Programs:
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- Learn BTC USD Training Website Lesson Guide
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- How Do I Draw Upward Trend line in Charts in MetaTrader 4 Platform/Software?
