BTC/USD Forex Signal: Bitcoin Looking Heavy

Adam Lemon

The key support at $43,836 is looking very significant.

Last Monday’s BTC/USD signal produced a nicely profitable long trade from the bullish bounce at the key support level identified at $51,364.

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 $43,836 or $40,922.

  • 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 Idea

  • Go short after a bearish price action reversal on the H1 time frame following the next touch of $47,532, $48,065, or $49,161.

  • 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 Bitcoin was showing several bullish signs, such as trading above $50k at a new 3-month high. I was looking for a long trade especially from a bullish bounce at $51,364 and this is exactly what we got – this was a very good and profitable call.

The technical picture has changed dramatically again over the past week, following last Tuesday’s 17% drop which was made in just a few hours. This strong downwards movement bounced off the key support level at $43,836 which has continued to hold. After an initial rebound, the price has settled to trade in a heavy, bearish way over the past six days.

The picture looks bearish, but bears have a big hurdle in their way – the very strong support level at $43,836 which looks likely to produce some minor bullish moves before it eventually breaks down. The next big move will most likely be after that bearish break, so I will be happy to enter a short trade following two consecutive hourly closes below that level.

If this were a Forex currency pair I would also be prepared to look at scalping long trades from bullish bounces off $43,836 but due to the wider spreads in Bitcoin, this probably would not be a good idea.

BTC/USD

There is nothing of high importance scheduled 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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