BTC/USD Forex Signal: Bullish Rectangle Below $41k

Adam Lemon

The price has room to rise beyond $42k if a breakout above $41k is achieved.

Last Monday’s Bitcoin signals were not triggered, as none of the key support or resistance levels were reached that day.

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 $39,672, $38,332, $37,540, $36,279, or $36,641.
  • 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 bullish price action reversal on the H1 time frame following the next touch of $42,263 or $46,595.
  • 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 the price had risen to stand very close to $40k after having invalidated a key resistance area near that level. We saw a pause in the advance, but it looked likely that the price could quite easily make a further meaningful advance once it managed to get past $40k.

I wanted to enter a long trade at two consecutive higher hourly closes above $40k.

This was a good call as the price rose to reach $41k, and the entry signal was generated, but that trade would be standing at about break even now, as the price has consolidated below $41k instead of rising quickly beyond $42k as I had expected.

Nevertheless, the technical picture is still bullish, with the consolidation below $41k coming within a strong bullish thrust and looking tightly boxed. It looks like the kind of tight consolidation that will be likely to produce a bullish breakout soon above $41k. Another bullish technical factor supporting this scenario is the new higher “flipped” resistance to support level, which has clearly formed at $39,672.

I will be very happy to take long trades today from any firm bounces at any identified support level, as Bitcoin is looking likely to rise to higher prices soon, while most of the Forex market remains dull and range bound – although that could well change after the FOMC release due today towards the end of the New York session.BTC/USD

Regarding the USD, there will be releases of the FOMC statement, federal funds rate, and projections 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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