Bitcoin: Choppy, volatile blow-off
Yesterday’s signals may have produced a long trade from the pin bar / inside bar combination candlestick formation on the hourly chart which rejected the support level at $11,781. I doubt this will be a great trade due to the very high relative volatility, probably the best that can be achieved is hope for it to get back to break-even and exit the trade.
Today’s BTC/USD Signals
Risk 0.75% per trade.
Trades may only be entered before 5pm Tokyo time Friday.
Long Trades
Go long at a bullish price action reversal on the H1 time frame following the next touch of $11,781 or $11,508.
Place the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is $50 in profit by price.
Take off 50% of the position as profit when the trade is $50 in profit by price and leave the remainder of the position to ride.
Short Trades
Go short after a bearish price action reversal on the H1 time frame following the next touch of $13,166.
Place the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is $50 in profit by price.
Take off 50% of the position as profit when the trade is $50 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 yesterday that the outlook was certainly bullish, but the price may need to consolidate below $13,000 for a while before it will be able to rise much higher. Be very careful about taking a short trade from $13,006 or $13,116 – only do it if the rejection looks especially strong.
I was wrong, the price broke up above $13,000 but has fallen back quite sharply, all on much higher volatility. This is a major sign that the bullish trend has changed character and that we are likely to see a consolidation for a while, so this is probably going to be the right time on starting to take in any floating profits on long trades and to stand aside for a while.
I have no directional bias as I see the price as likely to range now over the near term.
Concerning the USD, there will be a release of Final GDP data at 1:30pm London time.