BTC/USD Forex Signal: Bearish Breakdown Below $40k Threatens

Crispus Nyaga

The crypto sector continues to show bearish signs, but bulls still fight.

Previous BTC/USD Signal

My previous BTC/USD signal on Thursday two weeks ago was not triggered as there was no bullish price action when any of the support levels were first reached.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be entered prior to 5pm Tokyo time Friday.

Long Trade Ideas

  • Long entry after a bullish price action reversal on the H1 timeframe following the next touch of $41,638 or $39,622.
  • Put 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.
  • 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 timeframe following the next touch of $42,591 or $43,581.
  • Put 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.
  • 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 two weeks ago that although we had medium-term bearish momentum, if we saw the price consolidate for at least a few more hours, a breakdown below $42,500 could be an effective short trade entry signal.

This was a good call as the price moved lower and after breaking below $42,500 reached as low as the support level at $39,622.

Over the past two weeks, we have seen a consolidation above $40k, which is taking place simultaneously with a consolidation above $3k in Ethereum, the second largest cryptocurrency by market capitalisation. The consolidation is heavy, the price action slightly bearish. The crypto sector has already lost a lot of value over recent weeks, and now looks prone to a further strong breakdown if Bitcoin can get established below $39,622.

Bitcoin has arrived and is sitting at a pivotal area around $40k. This means it is likely to either provide an entry for a profitable long-term long trade if the level continues to hold, or a short trade if it breaks down.

I will be happy to take a short trade from a bearish reversal off either of the resistance levels identified above, or after two consecutive hourly closes below $39,622. However, if we get a bullish bounce at $39,622, I will also be ready to take a long trade there.

BTC/USD

There is nothing of high importance due regarding the USD today.

Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

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.