BTC/USD Forex Signal: Recovery from Dangerous Breakdown

Adam Lemon

The price has room to rise to $33,445.

Previous BTC/USD Signal

My previous signal on 9th May was not triggered, as there was no bullish price action at any of the key support levels I had identified when they were reached that day. Unfortunately, the price came close to $33,828 but never quite reached that level.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered prior to 5pm Tokyo time Wednesday.

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 timeframe following the next touch of $28,607, $27,981, or $27,487.
  • 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

  • Go short after a bearish price action reversal on the H1 timeframe following the next touch of $33,445 or $33,828.
  • 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 in my last piece on 9th May that Bitcoin had fallen with strong bearish momentum after breaking down from a consolidating triangle chart pattern and entered what had historically been a very pivotal zone, from the support level at $28,607 to approximately $35k. I thought that if the price could get established below the support level at $28,607 it could quickly fall to $10k or even lower.

The price did get established below $28,607, but my call was not great as the price rebounded quite firmly and is now making a bullish consolidation above what is again the nearest key support level at $28,607.

I see Bitcoin’s recovery from the price area below $28,607 as technically significant, showing that buyers are still prepared to step in strongly when Bitcoin reaches long-term lows.

If the support level at $28,607 does not break down, I see the next likely price movement for Bitcoin as upwards to the next resistance level at $33,445.

I will be happy to take a long trade here if we get a retracement to $28,607 and a bullish bounce off that level.

BTC/USD

Concerning the USD, there will be a release of Retail Sales data at 1:30pm 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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