Yes, we are in a downtrend market, at least in the short term. However, we don't have to cry about it or sit tight, hoping for a shift in trend. Instead, we can follow the market wherever it might take us.
In today's analysis, I will share my simple trend trading strategy. Let's start with Bitcoin.
BTC
On this 1-hour chart, we can see BTC clearly downtrending as it has broken several horizontal support levels, which have turned into resistance. BTC then tried to break them without success (blue arrows).
This shows us that we're clearly in a downtrend, and we can play that thesis until it has been invalidated, meaning a horizontal line is broken and BTC makes a higher high, returns to test the broken line, and if successful, creates a higher low.
I've also drawn a diagonal trendline, but keep in mind that horizontal lines are stronger indicators so we're going to focus on those.
BTC Dominance
I'm not currently planning on trading Bitcoin, but as we know, whichever direction BTC takes, most alts will follow. If Bitcoin drops, alts drop more, and if BTC surges, alts will surge even more. Therefore, I'll trade alts but keep an eye out for BTC and the Bitcoin dominance chart.
Here we can see that the BTC.D has once again bounced back up and has now broken the resistance line at 64.3%. It's now headed to test that zone as a support while alts have had some short-term relief at least.
Still, a bounce back up from there with falling BTC price would again send alts down, validating the continuing downtrend.
SUI Short
To take advantage of the downtrend, I opened a couple of short trades, and SUI was one of those. I opened this 3x leverage trade shortly after a small bounce back up that was rejected. Overnight, the SUI price continued falling with the rest of the market.
My plan here is to keep following those BTC levels and adjusting TP & SL along the way. A few hours ago, I had an urge to close this trade on profit, but as you saw in the BTC chart, it's still testing the resistance level, so there's no validation of a trend shift yet. We still follow the market.
Currently, my SUI trade is up 17.26% even though it's pretty pointless to be celebrating yet since I'm sticking to my plan and gonna see how it plays out.
JUP Spot
Trading with leverage is something I wouldn't recommend using unless you know what you're doing. That being said, sometimes it is a great tool which I use to gain more stables which I then use to buy more spot.
Still, downtrends like these can also offer good spot buying opportunities. Just remember, the same rules apply here as well: follow the market, wait for validations or invalidations, don't rush into trades.
Here's a good example of a spot trade I've been planning since Wednesday.
With the Jupiter exchange's native token, $JUP, I've had some good spot trading success. I first managed to sell it near the top, then bought right after it bounced from support, and again sold near the top in two parts.
Like a shark, I've been patiently waiting for $JUP to fall back into levels where I made the previous buy, and now it's there.
However, before jumping straight in, the same rules apply here as with the leverage trade: I'm watching whether BTC gets rejected or not before adding JUP again. Besides, as you can see in the pic above, it's now testing the previous support as resistance, so I'm waiting for validations on both BTC and JUP.
Even though this will be just a spot trade, there's no need to rush in, as I can get more JUP if we drop more.
Conclusion
In my opinion, trading doesn't need to be complicated. We don't actually need fancy indicators & tools, but instead, we are just fine drawing trendlines to determine whether we are in an uptrend or a downtrend. Then we respect and follow that trend until proven otherwise.
Sure, I use tools such as volume & RSI, but only to validate and support my original analysis based on trendlines. Keep it simple. Not financial advice, but just keep it simple.
Thank you for reading!
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