2024-03-02

MARA/BTC trade

This post will be a detailed review of my high conviction trade on BTC or crypto expressed through MARA -5.99%↓ .

Mara Chart Daily:

1
  1. We see a significant push in MARA -5.99%↓ due to its involvement in the crypto mining space and the BTC pump/crypto hype. We top out at around $31.40.
  2. We move lower on significant volume with five consecutive red days and build a base. At that time, I was already quite sure that we would move to new highs or at least squeeze out the people who went short on those red days with the high volume. (Too many people on one side of the boat)
  3. We move higher, squeezing out the shorts who all got in on the 'other side' during the red days. On the intraday chart, you can see how the pattern clearly shows shorts constantly starting to cover.
    4. 2
  4. We have kind of a double top, and many inexperienced traders will short this, which only works to some extent.
  5. I see how we form this local bottom, which as it is, does not seem unusual, and it could have gone a lot lower. For my conviction, we need to look at the BTC chart.
  6. See how I executed below

Now onto the $BTC chart

3
  1. We see a big move up
  2. Top out some might even say extened and roll over. As you have already noticed, I'm already looking for areas of emotion where most people get trapped. So I did not think we would move down this cleanly and just let the shorts win.
  3. I first noticed this play on the 23rd and was already prepared. On the morning of the 26th, I saw how we were red on the day(below the blue line).
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Now back to Mara where I wanted to express the trade.

5

I took this picture of the chart on the 22nd where I saw this clear O'Neil-like pattern, so I was already prepared for the up move on the 22nd.

6

This did not happen; it just faded (red circle) while the O'Neil-pattern was still valid. When I got on the PC on the 26th before premarket open and saw it gapping up, then I was pretty sure that we would rally. I would have put it into a range of 65%-85% chance of going up, but I have to add that I did not think it would rally that much (close to 20% on that day).

Summary:

This trade is based on:

O'Neil + BTC breakout + Too many on one side

Overall, this was a great setup with the right expectancy and RR, where even if you had a tight stop, you would not have been whipsawed. I did not think that it would go up that much. I can confidently say that this was not hindsight at all, as I had everything documented beforehand.

Thanks,

Finn