Image Source: Pixabay
 

These are interesting days we are living in, there is no doubt about it. The TACO trade has come and gone for this week. While I can’t say how the overall market will take this (it’s been saved from a plunge in the current week, but still chopping near important zones), I can say that it had little impact on my bearish outlook for BTC and MSTR. There is not too much new information on the fundamentals of my trade (BTC weak, MSTR weaker), I wanted to provide my trade plan on how I am approaching this since I am jumping back in short after getting shaken out.
 

BTC Daily
 

I circled two important spots. The first was the retest under a major ascending trendline break. What was important about this spot was that it was the first test after a smaller bullish breakout pattern set up where this broke out from 94k. This brought back all the crypto hype to say “we are BACK”, which of course got my bearish blood running. I had covered my MSTR position as it was dragged up and waiting for this bullish breakout attempt to fizzle out. I will say that I was hoping this first test would simply be the first of several before really rejecting a bit higher from 100k (green path followed by red arrow). But as we can see, that didn’t happen.

And so, feeling foolish, I was left with my capital deployed in other successful (but less so) trades. So instead, we saw this bullish breakout attempt fail immediately. Not very bullish. Furthermore, there was a smaller timeframe ascending trendline showing the buyers basing attempt which, as of yesterday, also failed. Today’s action successfully retested and rejected, though it was saved intraday by the TACO bullishness. Regardless, it is still abiding by this trendline for now and has further potential to reject.
 

BTC, hourly
 

This zoomed in view is important to understand the action we saw this past weekend. The green circled areas were important breakout levels (prior short-term highs) and it attempted to hold and take off (green arrow) which would have been a textbook retest and bounce. But that didn’t happen.

The breakdown negated all the bullish pattern and successfully sent this back down into the choppy zone we were in for most of December, which had its low end of the range at 86k and high end at 90,500. So we shall see if this traps the action once again. But I am still bearish and seeing that prior broken bullish pattern adding to the bearish potential. I’m still looking for the breakdown to 75k and, after a dead-cat bounce, a retesting towards 50k-60k.
 

MSTR Daily
 

This is the real chart I am watching. I am still bearish as all hell on this thing. First, the chart is shit. We’ve seen some little short-term pops due to BTC basing attempts. But it’s still under averages and it’s still showing lower highs. We haven’t broken down yet as it all depends on BTC. If/when BTC heads back to 75k, this should start retesting $100 fairly easily.

From there, I’m expecting some bounce attempt off the big round number to coincide with the BTC bounce from 75k. But if BTC starts to show weakness again to head back towards 75k for a breakdown, then this could very well be heading towards double digits. The blue circled target is not an exact target as I have no idea where this might stop. But the possibility that it could breakdown beneath $100 could lead to a tremendous wipeout.

So the fundamentals of my trade haven’t changed. Stop Levels and targets continue to evolve, but the weakness in MSTR is justified. Despite all the accounting “magic” of their preferred shares structures, it all boils down to “Buy BTC” as their only strategy. And if BTC is not hitting new highs every day, then this is a losing bet. And furthermore, they keep doubling down! They just bought another $2b worth of BTC at 95k (genius!). So as they keep adding in on the way down and as long as BTC doesn’t break these resistance levels, I’ll keep on shorting MSTR.

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