BTC/USD Forex Signal - 7 February 2018

Yesterday’s signals produced a losing short trade following the bearish engulfing candlestick which rejected the former resistance level identified at $7,347.

Today’s BTC/USD Signals

Risk 1.00% per trade.

Trades may be entered at any time during the next 24 hours period.

Long Trades

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $6,811, or $5,639.

  • Place the stop loss 1 pip below the local swing low.

  • Move the stop loss to break even once the trade is $200 in profit by price.

  • Remove 50% of the position as profit when the trade is $200 in profit by price and leave the remainder of the position to run.

Short Trades

  • Short entry after a bearish price action reversal on the H1 time frame following the next touch of $7,990 or the bearish trend line shown in the chart below currently sitting at about $8,500.

  • Place the stop loss 1 pip above the local swing high.

  • Move the stop loss to break even once the trade is $200 in profit by price.

  • Remove 50% of the position as profit when the trade is $200 in profit by price and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I painted a very bearish picture yesterday and I turned out to be completely wrong, at least over the short-term. The price recovered strongly from the low with a clearly impulsive movement, wiping out resistance and printing new and higher support at $6,811. It is interesting that this recovery corresponded to the strong recovery in the U.S. stock market, because it suggests that Bitcoin is seen as a risky stock rather than as a currency or commodity, which makes sense.

Despite the bullish impulsive movement, there is a medium-term bearish trend line at about $8,500 which is likely to be a severe test for Bitcoin bulls. If the price can break above this level it would be a bullish sign. The momentum seems to be with the bulls right now, but I have no directional bias.BTCUSD

Regarding the USD, there will be a release of Crude Oil Inventories data at 3:30pm London time.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment. Learn more from Adam in his free lessons at FX Academy.