BTC/USD Forex Signal: Choppy Trading Below $60K

Adam Lemon

$56,447 looks very pivotal as a bearish head & shoulders neckline.

Last Monday’s Bitcoin signals were not triggered, as there was no bearish price action when the price first reached the two resistance levels identified that day.

Today’s BTC/USD Signals

Risk 0.50% per trade.

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

Long Trade Ideas

  • Long entry after a bullish price action reversal on the H1 time frame following the next touch of $56,447 or $54,555.

  • 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 Idea

  • Short entry after a bearish price action reversal on the H1 time frame following the next touch of $58,350.

  • 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 last Monday that as both the resistance level at $58,213 and the support level at $56,447 looked strong and pivotal, so a productive approach to trading Bitcoin today was likely be to wait for one of these levels to be broken and then to look to trade in the direction of the breakout.

This was an OK call as we got a bullish breakout from that range, and the price rose by more than $1,000 from that level. However, the breakout quickly faded and broke down.

The technical picture is one of very choppy, consolidative trading below $60k which suggests topping before a bearish breakdown. The pattern is not quite a classic bearish head and shoulders, but it still seems to be there, which means that the support level at $56,447 is a classic neckline.

As the most clearly pivotal level on the price chart by far is the support at $56,447, I will today only be prepared to take either a long trade from a bullish bounce there, or a short trade if we get two consecutive hourly closes below that level.

I think a bearish breakdown below $56,447 is more likely that the level holding, but it may take longer than today to happen.

BTC/USD

Concerning the USD, there will be a release of the FOMC Meeting Minutes at 7pm 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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