As crypto declines, many traders are contemplating short positions. The big question isn’t just whether to enter—which remains your decision and at your own risk—but rather where to enter to avoid FOMO-driven mistakes. Entering late without considering key price levels can result in getting squeezed out, suffering unrealized losses, and ultimately exiting in frustration.
This is not a classic tradeCompass setup where we define a bullish or bearish threshold. Instead, this plan focuses on fading a retracement in Bitcoin futures, targeting a high-probability rejection at well-defined resistance levels.
At the time of this analysis, Bitcoin futures are trading at 89,800, down -4.46% from yesterday’s close. The goal here is to capitalize on a bounce from the current low (~88,000) and short into key resistance zones.
Key Levels for This Short Trade Plan on Bitcoin Futures
Our analysis identifies multiple significant resistance levels where Bitcoin futures may struggle to sustain upward momentum:
- 91,345 → A confluence zone marked by the Value Area Low of Feb 3rd and Value Area Low of Jan 11th
- 91,780 → A historical Point of Control (POC) from mid-January
- 92,000 → Today’s POC, a high-volume node with significant trading activity
- 90,450 → Current Value Area Low (VAL)
- 92,765 → Uppermost level for scaling into the short position
By incorporating these key levels, we set up a structured short entry plan, allowing for a weighted average entry while scaling in, rather than attempting to pick an exact top.
Bitcoin Futures Short Trade Plan (Jan 25, 2025)
| Sell Order | Entry Price | Units | % of Position Budget | Weighted Avg. Entry Price | Stop Loss |
|---|---|---|---|---|---|
| 1 | 90,975 | 1 | 16.67% | 90,975 | No Stop |
| 2 | 91,810 | 2 | 33.33% | 91,531 | No Stop |
| 3 | 92,765 | 3 | 50.00% | 92,148 | 93,760.9292 |
Summary of the Trade Plan:
- Weighted Average Entry Price: 92,148
- Full Position Size: 6 Units (Adjust as per risk tolerance)
- Stop Loss: 93,761 (1.75% risk from weighted entry)
- Take Profit Target: 85,698 (7.00% reward from weighted entry)
- Reward-to-Risk Ratio: 4:1
If all three short orders are executed, the trade achieves a high-probability 92,148 weighted average entry, ensuring that risk is spread across multiple entries rather than concentrated at one price level.
Exit Strategy & Profit-Taking Considerations
This trade aims to ride the continued bearish momentum, but even if Bitcoin declines further—potentially to 79,000—it is crucial to take partial profits along the way to reduce exposure and lock in gains.
- Primary target: 85,360, a major Point of Control and liquidity area
- Secondary target: 83,060, near the 83K round number, reinforcing psychological significance
Traders who are more aggressive may hold a portion of their position for a potential breakdown below 83K, but prudent risk management suggests scaling out at the planned levels to avoid overexposure to unexpected reversals.
The Importance of a Structured Short Plan on Bitcoin Futures Today
It is not easy to enter a move after it has already happened. Everyone wants to catch the early breakdown, but knowing how and where to join a continuation move is even trickier.
This is where the tradeCompass approach excels. Instead of blindly entering a short after a large move, it helps traders identify key price levels where other market participants are likely to react.
Unlike retail traders who might be looking at BTC/USD pairs on Coinbase or Binance, this analysis focuses on Bitcoin futures, which trade differently due to larger liquidity pools and institutional activity. If you’re following this setup, open a Bitcoin futures chart to align your analysis properly.
Last on this Bitcoin Short Setup (at your own risk only)
By using a structured shorting plan instead of emotional entries, this setup allows for maximum reward potential with controlled risk exposure.
For those highly bearish and anticipating Bitcoin futures to drop toward 79,000, this plan still advises taking partial profits at strategic points along the way. Locking in gains at 85,360 and 83,060 ensures traders don’t get caught in a short squeeze before reaching their final downside objectives.
As always, trade at your own risk and manage your position size wisely. Liquidity traps and market squeezes can invalidate even the best trade setups.
Good luck, and stay disciplined. Visit ForexLive.com for additional views.