BTC/USD Forex Signal: Break Below Ascending Price Channel

Adam Lemon

BTC/USD: Yet still supported from $9,000 / $9,500 area

Yesterday’s signals gave a long trade entry from the bullish inside hourly candlestick setup which rejected the support level identified at $9,431. This trade has gone nowhere so far and requires a longer-term bullish outlook to justify holding onto.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be taken prior to 5pm Tokyo time Thursday.

Long Trade Idea

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $9,316 or $9,063.

  • Put the stop loss $50 below the local swing low.

  • Adjust the stop loss to break even once the trade is $50 in profit by price.

  • Take off 50% of the position as profit when the trade is $50 in profit by price and leave the remainder of the position to ride.

Short Trade Idea

  • Go short after a bearish price action reversal on the H1 time frame following the next touch of $10,696.

  • Put the stop loss $50 above the local swing high.

  • Adjust the stop loss to break even once the trade is $50 in profit by price.

  • Take off 50% of the position as profit when the trade is $50 in profit by price and leave the remainder of the position to ride.

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 wrote yesterday that the action still looked bullish over the short-term, so higher prices over the course of the day were a bit more likely than lower prices.

This was not an effective call as the price fell sharply and broke below the dominant ascending price channel which is still shown in the chart below.

We have a very conflicted technical picture now: on the one hand, the key support levels have held so far, and we have a cluster of three levels close by $9,000 which will probably make it difficult for the price to get below $9,000 in any sustained way. On the other hand, the price has broken bearishly out of the lower end of a medium-term bullish price channel, which is a bearish sign.

I see the best approach as putting faith in this supportive area below $9,000 as likely to be decisive. So, I would not take a bearish bias until we get two consecutive hourly closes below $9,000. I still see the price as likely to rise from this cluster of support, but it may need to consolidate for a few days before that happens.

There is a long-term bullish trend, which supports taking a bullish bias.BTCUSDRegarding the USD, there will be a release of the ADP Non-Farm Employment Change at 1:15pm London time followed by ISM Non-Manufacturing PMI data at 3pm.

About the Author
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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