BTC/USD Forex Signal: Bitcoin Threatening Major Breakdown

Adam Lemon

Will the floor at $58,500 hold or break down?

Last Monday’s BTC/USD signal produced a very profitable short trade from the small bearish doji candlestick on the hourly chart which precisely rejected the resistance level I had identified at $63,763.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered before 5pm Tokyo time Thursday.

Long Trade Ideas

  • Long entry after a bullish price action reversal on the H1 time frame following the next touch of $58,906 or $58,541.

  • 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

  • Short entry after a bearish price action reversal on the H1 time frame following the next touch of $61,738, $63,763 or $64,368.

  • 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 Monday that if the price could hold up above the level at $61,738 it would be a bullish sign suggesting that the price was ready to make a significant rise again. I was correct insofar as the price spent most of the day rising from the area above that level, but the real opportunity of the day was a short trade from the very exact rejection of the resistance level at $63,763.

The technical picture has changed a little as it has become clearer that the price is being compressed into a narrowing triangle, with the angle provided by the descending bearish trend line shown in the price chart below, and a supportive floor just below $60k with a key level at $58,906.

As the London session got underway the price fell sharply and is now bouncing off this key supportive floor at $58,906.

Bitcoin is at a pivotal moment: either the floor will hold firmly and provide a buying opportunity, possible a long-term opportunity – or the floor with break down, the price will get established below $58,541, and we may well then see a sharp further fall in price.

I am prepared to take a long trade from this floor area if the price action holds up above it for some hours and then become much more bullish, or alternatively, to go short if the price gets established below $58,500.

BTC/USD

Regarding the USD, there is nothing of high importance scheduled today.

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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