BTC formed a head and shoulders pattern on its daily chart and created many new short positions before the pattern was closed. Likewise, Ethereum created many new short positions after falling under a bull flag.

Bitcoin is preparing for a massive short squeeze

BTC has been in a downtrend since the end of last year. Bitcoin has fallen more than 20% since it opened last week. Fear is an emotion that affects most retail investors.

Selling pressure after BTC fell below the December 4th flash lows are low. A short squeeze setup developed on the USD 1,000 / 3 box reversal Caro chart.

The hypothetical long entry is a buy stop on a 3 box reversal, currently at $ 45,000 with a stop loss of $ 41,000 and a profit target of $ 60,000. The hypothetical trade setup offers an RR (risk / return) ratio of 3.75: 1 with an implied profit target of 35% from entry. The two cell stop helps protect potential gains once the entry is triggered.

Caro Chart BTC / USD $ 1,000 / 3-box inversion | Source: TradingView

There is no cancellation point for the hypothetical long entry. When the Bitcoin price goes down, the entry and stop loss move at the same time, but the profit target of $ 60,000 remains the same.

ETH also has the same setup as BTC

Like BTC, ETH also creates favorable conditions for many short sellers to enter the market. This could create a big bear trap, and those who have been bitten are likely to experience a lot of pressure in the week to come.

There is a hypothetical long entry for Ethereum on the Caro $ 100/3-box reversal chart. This setup is a buy stop at $ 3,500, a stop loss at $ 3,100, and a profit target of $ 5,500. The hypothetical trading setup offers an RR (reward / risk) ratio of 5: 1 with an implicit profit target of 60% from entry. The 3 cell stop helps protect potential gains once the entry is triggered.

Caro chart ETH / USD 100 $ / 3 box inversion | Source: TradingView

ETH also has no cancellation for the hypothetical long entry. If Ethereum turns down, the entry and stop loss will also move down after the price action, but the profit target will remain the same.

You can see the BTC and ETH price Here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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