BTC/USD Forex Signal: Ranging

Adam Lemon

BTC/USD: Reversals from price extremes likely to be best strategy 

Last Thursday’s signals were not triggered, as the bullish price action at the support level of $10,421 printed too slowly to generate a long trade entry signal.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be entered prior to 5 pm Tokyo time Tuesday.

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $10,421 or $10,351.
  • Put the stop loss $50 below the local swing low.
  • Move 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 run.

Short Trade Ideas

  • Go short after a bearish price action reversal on the H1 time frame following the next touch of $10,847 or $11,023.
  • Put the stop loss $50 above the local swing high.
  • Move 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 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 wrote last Thursday that there was definitely more potential on the bullish side, but price advances continued to be slow.

I thought that the best approach to Bitcoin would be to still look for long-term buys at or close to the $10,000 level.

I thought it would be a significantly bullish development if the price can get established above the higher resistance level shown in the price chart below, at $11,023.

This was a good call as the price was bought after falling to an area not far from the key $10,000 area. The fact that the price has also remained below the resistance level I mentioned at $11,023 is also telling and has been a warning to bulls not to get overly excited.

We have seen the price grind higher after the low made early last Friday, but over the longer-term, it can be seen that the price is really just going sideways above $10,000. There is buying there, but no sign that the price is going to make any significant new highs above $11,023.

As long as this situation continues, I think buying at support levels just above $10,000 or even lower is likely to be the best approach. Selling at $11,023 could also be a good though shorter-term trade.

As long as the $10,000 area holds there is reason to expect an eventual price rise. The signal to get more bullish will come if and when the price can get established above $11,023.

BTC/USD

Regarding the USD, there will be a release of ISM Non-Manufacturing PMI data at 3 pm London time.

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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