BTC/USD Forex Signal: Consolidation Continues

Adam Lemon

$42,663 looks likely to be today’s pivotal point.

Last Wednesday’s BTC/USD signal produced a nicely profitable long trade from the bullish rejection and inside bar break of the support level identified at $41,483.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be taken before 5pm Tokyo time Thursday.

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 time frame following the next touch of $38,728 or $37,633.

  • 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 $42,663 or $45,261.

  • 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 Wednesday that the way to trade Bitcoin that day would be to sit tight until the level at $41,483 was reached and see if we got a bullish bounce there – which would indicate that the price would most likely make a weak and possibly choppy rise towards $44,268 – or whether the price broke below the level, which would be a bearish sign suggesting the price would fall further and trade below the $40k area. I saw a slow-moving long trade from a bounce at $41,483 as the best potential setup.

This was a great call, as the price fell sharply to the $41,483 level that day and rebounded quickly initial, before grinding upwards from that bounce over the rest of the day.

The technical picture now is considerably less exciting as the price has been trading within a flat range over the past ten days or so, with slightly choppy price action wiping out most nearby key support or resistance levels. The price is near the middle of the range, which stretches from about $40k to $45k. This suggests that there are unlikely to be any good trading opportunities in Bitcoin today, but the resistance level at $42,663 nearby offers some hope as a likely pivotal point. If the price rejects this level and makes a bearish reversal it could fall somewhat lower over the rest of the day. Alternatively, if the price gets established above $42,663, it will be likely to rise somewhat over the rest of the day. The long trade scenario probably has more to offer than a short trade from a reversal there, so an approach could be to enter a long trade if there are two consecutive higher closes above $42,663 today.

BTC/USD

Concerning the USD, the head of the Federal Reserve is scheduled to take part in a public discussion through the ECB at 4:45pm 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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