BTC/USD Forex Signal: Continuing Weak Bearish Trend

Adam Lemon

Selloff from $40k area slowing in momentum.

Last Monday’s Bitcoin signals were not triggered, as there was no bullish price action when the price reached the support level at $38,653.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be taken before 5pm Tokyo time Wednesday.

Long Trade Ideas

  • Long entry after a bullish price action reversal on the H1 time frame following the next touch of $37,633, $36,656, or $35,258.

  • 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

  • Short entry after a bearish price action reversal on the H1 time frame following the next touch of $38,728 or $40,625.

  • 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 Monday that the near-term direction of Bitcoin was unclear. I thought that the support level at $38,653 looked likely to be very strong, so if the price could get established below $38,653, that would be a bearish sign.

I was wrong about the strength of the identified support level at $38,653 but I was correct that once the price got below it would continue downwards. However, the pace of the downwards movement has slowed.

We have a long-term bearish trend and a continuing medium-term selloff from the recent brief pop above the big round number at $40k. Most cryptocurrencies have been falling over recent days with reasonable momentum.

In this market condition, I think the best approach is to wait and see if we today get two consecutive hourly closes below the support level which is currently being felt at $37,633 and enter a careful short trade if that sets up.

However, it is worth noting that the price only has another $1k or so before it would meet the next support level, so it does not seem to have a lot of room to fall.

BTC/USD

Concerning the USD, there will be a release of the ADP non-farm employment forecast at 1:15pm London time followed by ISM Services PMI data at 3pm London.

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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