Using Short Charts

Hello and welcome to Diary of a trader. in some of our previous videos we have discussed the importance of identifying where market bottoms may arrive and where we may see the turning point in the market and the video. If you watched it was the most recent video on using Ethereum as an example, then you saw that we had all these confluent zones of these shared Fibonacci areas. We had angles within the Gahn square of 90 and we also had a volume supporting that one. But today I really want to discuss how to use this is really specific to just crypto currencies is how to use short charts to determine. Whether it’s safe to go long or short in a long term or short term trading buy. So we’ll use Bitcoin as this example, so if I look at bitcoins chart I see that you know we have been in a downtrend and I see that we are finding some type of support maybe but not sure you know hard to determine whether or not this will stay. It’s just a false supported zone are we going to just continue down lower while looking at just this chart can sometimes not provide enough info or even if it does provide enough info. We always like to see other contrary and confirming information. And one of the benefits excuse me of of crypto currencies is that many of the most traded pairs like bitcoin, Ethereum like coin iOS Cardno they will have accompanying chart charts. And this is usually just from one data provider and that’s bit Phoenix there another crypto currency exchange and so if we look at. This is the bitcoin Dollar pair, but the shorts. So this chart represents its short, meaning that these are bear trades. These are people who are taking short positions against Bitcoin. This chart shows us how much participation shorts are having so if there are more people shorting bitcoin on this chart, it will look bullish it will look like buyer’s. Let’s look at the daily on this so. We can see that as we have gone on and we’ve we’ve progressed over the last ever since the end of the month of May and the beginning of June we’ve had an increase and the people participating in shorting bitcoin. OK, so this is the short interest now as we’re looking at this though. What has happened as we’ve moved forward during the day is we’ve gotten kind of expensive. We’ve really technically gone parabolic and if you remember the definition of a parabolic rise as you have a clear and steady trend. But then the swing are the trend. They get more and more expensive in there. They’re right the slope or the pitch increases considerably as we move higher. And so this is the definition of a parabolic move. And that is exactly what happened with this chart. In addition to that. We can see that in our Phibbs retracement from Swing High Swing low. We see that we have found

A stopping area not only at the top of our Mukulu cloud but.But that has also equated to the 50 percent retracement zone in the in the in the in our Fibonacci retracement. So we see this short volume is coming down so a lot of people who bought the remember a parabolic rise that people. Are experiencing fono fear Of Missing Out. Where people have participated at the top here thinking they’re going to shoot at at these levels, but in fact they’re going to be the people that will fuel a rise lower.

So we’re looking at the chart here we see that as Bitcoin has been rising in value from its most recent swing. We see that the bitcoin shorts have been falling and so as we see more and more decreased values in this chart we can see higher prices correspond to bitcoin. Now one thing we may notice and this does happen as you’ll see bitcoin rising in value as well as the shorts and so there’s a couple of ways that you can that you can view this because if prices in bitcoin are rising but the short interest is rising as well. That means that there are a lot of people trying to short the rally in Bitcoin. And if we don’t see the response of selling. As there are. As more shorts are pouring in then all that means is that there’s not enough short opportunity there’s not enough or rather there’s not enough participants to move prices lower and that means that all the people that have been buying are eventually going to have to cover because as the prices rally in bitcoin the short positions decrease in value and they’re going to get you know you know this is traded on margin. So you’re going to have to eat a loss and those people who are trying to short. And are holding those shorts as bitcoin is rising they’re going to have to cover and they’re going to be turning into buyers. All right, so that is a this is a good tool that not a lot of people utilize but people should and in fact I might in my opinion, I think that this is a this is a phenomenal tool that we have at our disposal because we get to see a chart that represents the actual participation of people who are taking the short side of this market. And we really do not get access to this kind of information in other markets such as the futures or an orange for. So we get to see a live representation of the shorts and they even have a long biffing X has a chart showing the long participation as well. All right.

So this is a very awesome and useful tool to implement in your trading in crypto currencies. And I hope you find this video helpful and useful and I look forward to talking with to you and our next video.

Have a great day. Bye.

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