This weekend culminates the end of summer, and China’s 70th anniversary of its victory over Japanese aggression. China the most important market in terms of Bitcoin trading has a four day holiday until Sunday September 6th. This weekend is Labor Day weekend in America and Monday September 7th is a bank holiday.
While the majority of the world’s traders are watching national propaganda parades and grilling burgers, the Bitcoin market will remain open. The thin liquidity presents the perfect opportunity for a market operator to push the market aggressively in one direction using little capital. If I were to conduct a bear raid or short squeeze, I would choose this weekend to execute the operation.
Bitcoin has been trapped in a $225 to $230 range during this week’s trading. The Bitfinex swap market does not point to any gross mismatch between leveraged longs or shorts. When Bitcoin breaks out of this range the movement will be swift and momentum traders will be able to join the ride.
Scenario 1: A break above $235
A solid break above $235 on above average volume will lead to a swift move through $240 to $250.
Scenario 2: A break below $220
A solid break below $220 on above average volume will lead to a swift move downwards towards $200. $200 is unlikely to fall again, and another swift rebound to the high $210’s is expected.
Timing:
The optimal time to execute the strategy would be Saturday. US traders will be settled in on their long weekend holidays and this is the last day of the China holiday. This will be the lowest level of liquidity this weekend. It will be very easy to push the market and ignite the momentum bots to follow the trend.
Trade Recommendation:
Buy BitMEX September 25x leveraged futures (XBTU15) if spot breaks above $235. The upside target price is $250.
Sell BitMEX September 25x leveraged futures (XBTU15) if spot breaks below $220. Cover the short at $200, then go long with an upside target price of $215.