Bitcoin has moved from a low of nearly 29220.00 on the 21st of July to highs of approximately 40500.00 in early trading today. After reaching this high water mark earlier today, which had not been touched since mid-June, BTC/USD has reversed lower and is near the 37250.00 mark with fast trading conditions dominating the market.
How do you trade BTC/USD? If you are a short term trader you need to be extremely vigilant. Monitoring Bitcoin and believing you have a firm grasp on its technical charts may prove not to be enough; you might also need a little bit of luck if you are trying to take advantage of perceived trends. When an asset has the ability to move three thousand dollars in a direction within in a few hours, stating that risk management is essential is not an aggressive warning.
The past few months have seen a strong bearish trajectory created within the cryptocurrencies. BTC/USD being the dominant asset in the speculative class has certainly been the main driver regarding behavioral sentiment. The ability of BTC/USD to move higher in the past week is certainly noteworthy; the change in value from the lows on the 21st of July up to today’s early high is a plus 25% gain.
If you have been lucky enough to catch this wave higher I offer my congratulations, but timing the market in the short term is not an easy endeavor. Yes, there will be some who say boldly that BTC/USD was an obvious buy during last week’s lows, but proving they took advantage of this rise in value may prove harder for them to display. The question after having moved off of its lows last week and towards today’s highs, is where is BTC/USD going to trade next?
The explosive move in BTC/USD cannot be discounted and traders need to use a supreme amount of risk taking tactics to guard against wild fluctuations. Limit orders with entry prices firmly asked for are needed, so are stop loss and take profit mechanisms to make sure BTC/USD doesn’t get out of control. Speculators need to be bold in this type of market if they want to participate.
Perhaps buying BTC/USD on slight movements downward that potentially test the junctures of 37200.00 to 37175.00 could prove worthwhile. However, being cautious within a fast moving market like BTC/USD may also mean you miss out on an opportunity to trade the asset because it is simply moving beyond your risk management mandates. The short term trend may continue to produce a test of resistance levels near the 37700.00 juncture, but again traders are advised to be careful and be ready for volatility.
Bitcoin Short-Term Outlook:
Current Resistance: 3775.00
Current Support: 37150.00
High Target: 38100.00
Low Target: 36440.00
