BTC/USD Forex Signal: Pullback and Consolidation

Adam Lemon

The long-term picture is of course bullish, but the price may well be due a deeper pullback.

Yesterday’s signals produced a long trade which has broken even from the bullish bounce rejecting the support level I had identified at $22,029.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered before 5pm Tokyo time Wednesday.

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $22,029 or $20,910.

  • Put the stop loss $100 below the local swing low.

  • Adjust the stop loss to break even once the trade is $100 in profit by price.

  • Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

Short Trade Ideas

  • Go short after a bearish price action reversal on the H1 time frame following the next touch of $23,255 or $25,000.

  • Put the stop loss $100 above the local swing high.

  • Adjust the stop loss to break even once the trade is $100 in profit by price.

  • Remove 50% of the position as profit when the trade is $100 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 there was no solid reason not to be bullish on Bitcoin (at least technically) – the price was continuing to print higher and higher new levels of support and continuing to break to new highs at least every two days or so. I thought that we would not see the peak until next week at the earliest.

This may not have been a very good call, as not only did the price fall over the past day, but the high level of volatility suggests a climax.

Technically, the price has clearly made a meaningful retracement and is now stuck between firm support at $22,029 and strong resistance at $23,255.

The long-term picture is of course bullish, but the price may well be due a deeper pullback.

I will still take a new long trade from another bullish bounce at $22,029 or even a lower support level, but I do not think there is enough room to go short from the resistance at $23,255 yet.

The longer-term odds are still with bulls, but it may be wise to go flat and stand aside and wait to see which breaks first, the nearby support or the nearby resistance.

BTC/USD chartConcerning the USD, there will be a release of final quarterly GDP data at 1:30pm 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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