BTC/USD: Support at $6,576 was strong
Last Tuesday’s signals produced a profitable short trade from the bearish reversal at the resistance level identified at $6,573.
Today’s BTC/USD Signals
Risk 0.50% per trade.
Trades may only be entered prior to 5pm Tokyo time Friday.
Long Trade Ideas
Go long after a bullish price action reversal on the H1 time frame following the next touch of $6,685 or $6,576.
Put the stop loss $50 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 Trade Idea
Go short after a bearish price action reversal on the H1 time frame following the next touch of $7,182.
Put the stop loss $50 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 last Tuesday that although I thought the nearest support level at $6,576 looked strong, I still wanted to take a weakly bearish bias between $6,973 and $6,576. I was prepared to enter a short trade from a bearish bounce off $6,973 due to the dominant bearish wedge pattern.
This was a great call as the price moved down after bouncing off the level at $6,973, before eventually bottoming the next day at the support level at $6,576.
The technical picture seems to be becoming more bullish as the upper trend line of the bearish wedge shown in the price chart below looks like it has now been broken. However, this may be a false breakout, or it may be that the resistance level at $7,182 is just too strong to break.
I think it would be wise to stand aside from trading Bitcoin today and wait to see whether the price gets established above $7,182 (bullish scenario), above the broken trend line (weakly bullish scenario), or falls back down into the old wedge area (bearish scenario).
Regarding the USD, there will be a release of Unemployment Claims data at 1:30pm London time.