BTC/USD Forex Signal: Strong Fall Following US CPI

May be finding support at $20k.

Previous BTC/USD Signal

My previous signal last Thursday was not triggered as unfortunately the bullish turn at the day’s low took place below $19,182.

Today’s BTC/USD Signals

Risk 0.50% per trade.

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

Long Trade Ideas

  • Go long after a bullish price action reversal on the H1 timeframe following the next touch of $19,617, $19,091, or $18,991.
  • Place 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.
  • 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 Ideas

  • Go short after a bearish price action reversal on the H1 timeframe following the next touch of $20,532, $20,782, or $22,096.
  • Place 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.
  • 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 in my previous analysis last Thursday that the price of BTC/USD looked quite likely to continue to rise and eventually test the pivotal point at $19,163. I thought that if the price broke above that level and we get a couple of consecutive higher hourly closes showing bullish momentum, the price would be likely to rise higher.

This was an excellent call, as after accumulating in that price area, the price made a strong bullish breakout from its range and ended considerably higher over the 24-hour period.

This produced a much more bullish technical picture, but the resistance level which I had identified at $22,713 yesterday held right into yesterday’s CPI data release, which sent the US Dollar firmly higher and risky assets (like Bitcoin) much lower, so we saw a sharp fall in the price.

The Bitcoin price is now not far from its area of former support, but what is significant is that we are seeing buyers step in at the $20k handle, which has therefore acted as support. We also have key support levels below $20k. We now see the price failing to clear resistance close by at $20,532.

I think the attractive action in Bitcoin for the time being is probably over, I cannot say with any degree of probability which is the likely next direction of the price now. We will probably see a messy battle between bulls and bears for the time being. However, there is probably greatest potential for upside following action at the key support levels below $20k. It may be wise to stand aside and only look for a long following a bullish bounce at any of the three key support levels listed above.

BTC/USD

Regarding the US Dollar, there will be a release day of US Producer Price Index data at 1:30pm London time.

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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.

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