BTC/USD Forex Signal: Back Below $40k

 Justin Paolini

Today’s pivotal point is likely at $40,625.

Last Wednesday’s Bitcoin signals produced a losing long trade from the bullish bounce which took place at the support level identified at $38,799.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be entered 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 $38,653, $37,633, or $36,656.

  • 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 bearish price action reversal on the H1 time frame following the next touch of $40,625, $41,479 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 Wednesday that although Bitcoin was breaking to new highs, the price really needed to get established above $40k and the key resistance level above that at $42,263 before it would really be able to take off.

I was therefore ready to take a bullish bias if we had gotten two consecutive higher hourly closes today above $40,600 or if we got a bullish bounce at $38,800.

This was a great call, as although neither level was reached over the remainder of that day, the level at $40,600 was a clear pivotal point as once we got a close above it later in the week, we immediately saw a more sustained price rise.

Bulls were successfully holding Bitcoin above the key $40k level for a couple of days but we have seen a relatively major bearish reversal which now has the price trading back below $40k.

The near-term direction of Bitcoin is unclear. Although we still have a valid long-term bearish trend with the price falling over recent months, the recent recovery in price has been significant.

The best I can say today is that the support level at $38,653 looks likely to be very strong, so a long trade entry from a bullish bounce there could work at least as a short-term trade.

If the price can get established below $38,653, that will be a bearish sign.

Concerning the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.

 Justin Paolini

Justin Paolini helps traders succeed through 1-on-1 coaching at BuildingaTrader.com. He is also Head of Trader Development at FCI Markets UK. Justin has over 15 years of experience trading Forex of which 3 were spent as a Sales Trader and as a Broker. Previously, he was an analyst at 3CAnalysis.com, producing institutional grade directional calls. His market commentary has been published on FXRenew.com, Yahoo! Finanza, Trend Online, FX Street, OrderFlowtrading.com, and ForexTell.com. For the past 8 years, he has dedicated himself to helping others succeed, and has been a guest lecturer at the University of Ancona on Trading and Market Dynamics.

Justin holds a B.A. in Economics & Finance from UNIVPM, Ancona, and a Masters in Finance, Banking & Insurance.

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.