BTC/USD Forex Signal: Bearish Consolidation

Adam Lemon

The short-term price action is bearish so it looks likely that the price will descend further over the course of today.

Last Monday’s signals were not triggered, as there was no bearish price action when the resistance level identified at $33,907 was first reached that day.

Today’s BTC/USD Signals

Risk 0.50% per trade.

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

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $28,607.

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

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

  • Take off 50% of the position as profit when the trade is $100 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 $32,927 or $35,686.

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

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

  • Take off 50% of the position as profit when the trade is $100 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 Monday that the technical picture had clearly become more bearish, with the new medium-term bearish trend lines drawn connecting the price. The supportive area at $30K, however, looked extremely pivotal.

Although the nearest resistance level was briefly broken, the price was not able to remain above it for long, and my essentially bearish outlook on Bitcoin has been proven correct over the past few days. In fact, I called the high on 11th January above $40k and the price has been falling ever since.

Despite the bearish action, and the fact that we can draw new bearish trend lines at steeper angles connecting the highs, the price is getting squeezed to some extent by the fact that the supportive area around the big round number at $30k is still holding up. This may hold over the long-term, so Bitcoin could be a good buy if we get a bounce at the support level at $28,607.

I am prepared to take a long trade from $28,607 but also a short trade from a bearish reversal at either of the two closest resistance levels.

The short-term price action is bearish so it looks likely that the price will descend further over the course of today.

BTC/USD chart

Concerning the USD, the FOMC will release a statement at 7pm London time followed by the usual press conference half an hour later.

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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