BTC/USD Forex Signal: More Bearish After Drop

Adam Lemon

Several new resistance levels are keeping the price below $57,500.

Last Wednesday’s Bitcoin signals were not triggered, as the price never quite reached the key support level which I identified at $61,240 that day.

Today’s BTC/USD Signals

Risk 0.50% per trade.

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

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $55,600, $52,664, or $51,634.

  • 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 bullish price action reversal on the H1 time frame following the next touch of $57,334, $58,450, $59,280 or $61,240.

  • 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 Wednesday that the price was continuing to rise solidly and had touched new record high prices just below $65k. We had strong bullish momentum, so I simply took a bullish bias for the day as the price was trading into blue sky.

The price closed slightly down that day, so this call did not work out so well, but I believe it was correct to see the odds in favour of yet higher prices that day.

The price did not regain its high of last Wednesday and sold off sharply over the weekend to touch levels more than 20% below the record high. The price managed to claw back about 10% of its value over the past 24 hours or so, which is a sign not to become a panicked bear. However, there is no doubt that we see a much less bullish technical picture now.

We can see several resistance levels above the current price which appear to be suppressing the price below $58k. We also have several support levels close by, so price action today looks likely to be choppy and consolidative.

In this environment, it will probably make sense to buy at extreme levels of support or to sell at extreme levels of resistance. Therefore, I am ready to take a long trade from a bullish bounce at $52,664 or a short trade from a bearish reversal at $59,280.

BTC/USD

There is nothing of high impoprtance due today concerning the USD.

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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