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Strategy (MSTR) remains one of my favorite vehicles for participating in bitcoin’s price movement without owning the asset directly. However, the recent crypto rout has been unforgiving. While bitcoin is experiencing its own correction, MSTR has amplified those losses, dropping a mind-boggling 67% since its July highs. Despite the severity of the decline, I am beginning to see the first green shoots of a potential reversal. The stock isn’t quite ready for a bounce just yet — trying to catch a falling knife here is dangerous — but the technical signs are starting to align. We are approaching deep oversold territory on major timeframes, and historical support levels are coming into view. For now, I am stalking the trade, waiting for a specific technical confirmation to signal that the selling pressure has finally exhausted itself. MACD (5,13,5) – triggered While the MACD is a cornerstone of trend-following analysis, its standard settings can be sluggish, often lagging behind price action in volatile markets like this. To gain a competitive edge and a more responsive signal, I utilize a faster custom setting of (5, 13, 5). MSTR’s MACD has recently crossed above the signal line. This bullish crossover provides the early “green light” indicating that momentum is shifting and the stock is primed for a move higher. Directional movement index (DMI) – pending The DMI tracks trend strength using three components: DI+ (green), DI– (red), and the ADX (blue). Reversals typically trigger when the directional lines shift, but we aren’t there just yet. Notice that DI– is still rising while DI+ moves lower. While this means the trend hasn’t officially turned, we are rapidly approaching capitulation levels—the exact zone where violent bounces tend to occur. RSI (Relative Strength Index) – Pending RSI measures momentum and provides our third confirmation. MSTR dipped decisively into “oversold” territory (below 30) on Nov. 12. Now, the indicator is attempting to reclaim that level. This climb back above 30 is a classic sign of seller exhaustion and often serves as an early green light for buyers re-entering the market. If you are interested in following an emotionless rules based trading system built on these principles, please check out here where my CNBC readers get a special Black Friday/Cyber Monday offer. The trade setup: MSTR 170-175 bull call spread For this MSTR setup, I’m using a bull call spread — a strategy that caps risk while offering a potential 100% ROI. Since we are awaiting technical confirmation, the entry price may move higher. However, the structure remains the same. For example, If MSTR is trading around $181 when the signals trigger, I will construct the spread by buying an In-The-Money (ITM) call and selling an Out-Of-The-Money (OTM) call. Specifically, I would target the $180 / $185 call spread in that case. This setup limits exposure while positioning us to capture the bounce once the reversal is confirmed. Here is my exact trade setup Buy $170 call, Jan. 2 expiry Sell $175 call, Jan. 2 expiry Contracts: 10 Cost: $2,500 Potential Profit: $2,500 -Nishant Pant Founder: https://tradewithmaya.com Author: Mean Reversion Trading YouTube, Twitter: @TheMeanTrader DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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