Both Bullish and Bearish signs in current bitcoin conditions
Updated
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After the bullish surge for bitcoin last week, there are reasons to be both bullish and bearish. Bitcoin has so far failed to follow up with another surge even though a bull flag pattern has been forming. Since the surge last week, the price has been trading in a downward channel, typical of a bull flag pattern. This pattern typically increases the likelihood that the price will follow up with a surge but in this scenario, I am slightly more bearish than bullish. Price has already moved outside of the channel to the upside but sellers quickly brought the price back inside the channel rejecting bullish movements.
The surge which took also failed to surpass the point of the previous high, leading to a more bearish market structure. There is also an important resistance level at $3680 decreasing the likelihood that a bull flag can take place and a sustained bullish movement can occur.
At the moment, I will be seeking long positions at $3510 with a profit target of $3650. My stop loss in this scenario will be $3450. for the price to reach this point, it would have to break through expected support at $3490 and any buyer liquidity below that point, clearly disproving the validity of taking a long position.
Short positions will be considered at $3660 or higher. However, if the price comes to this point, the order book will be closely monitored before taking a short position. If it looks like there is a large build up of buyers in the order book, a short position will not be taken due to the risk that price makes a significant surge above the $3680 resistance level.
With price currently continuing to move downwards within the channel, a long position is being closely monitored for with a buy limit order at $3510.
After the bullish surge for bitcoin last week, there are reasons to be both bullish and bearish. Bitcoin has so far failed to follow up with another surge even though a bull flag pattern has been forming. Since the surge last week, the price has been trading in a downward channel, typical of a bull flag pattern. This pattern typically increases the likelihood that the price will follow up with a surge but in this scenario, I am slightly more bearish than bullish. Price has already moved outside of the channel to the upside but sellers quickly brought the price back inside the channel rejecting bullish movements.
The surge which took also failed to surpass the point of the previous high, leading to a more bearish market structure. There is also an important resistance level at $3680 decreasing the likelihood that a bull flag can take place and a sustained bullish movement can occur.
At the moment, I will be seeking long positions at $3510 with a profit target of $3650. My stop loss in this scenario will be $3450. for the price to reach this point, it would have to break through expected support at $3490 and any buyer liquidity below that point, clearly disproving the validity of taking a long position.
Short positions will be considered at $3660 or higher. However, if the price comes to this point, the order book will be closely monitored before taking a short position. If it looks like there is a large build up of buyers in the order book, a short position will not be taken due to the risk that price makes a significant surge above the $3680 resistance level.
With price currently continuing to move downwards within the channel, a long position is being closely monitored for with a buy limit order at $3510.
Note
Price has continued to trade in the downward channel. Although many analysts have pointed out a bull flag, it is seeming more unlikely to take place given the length of period price has been trading in the channel.
However, prolonged period of trading within a channel/range such as this can end with price exiting the channel/range with a significnat movements. With the lower highs formign on the daily chart and momentum being to the downside for all of last year, there is a lot of reasons to be bearish if price moves to the downside from here.
However, I will still be looking to take long positions at $3510 and lower mainly because $3490 has been a significant support/resistance on the weekly and I will be expecting buyers to come in before price drops to this point.
However, my bias will quickly change to bearish if price drops below $3490. The stop loss for the long position will be $3450 and if price drops to this point, I will likely consider short positions.
Trade active
Given today's movement upwards, I am no longer seeking to get into a long position at $3510. A limit sell order filled at $3650 and I am currently short. The order quickly filled on the spike earlier today and I had a market stop loss at $3690 so the spike, fortunately, did not also hit my stop loss.
The stop loss will remain at $3690 and the profit target will be $3510.
Trade closed: stop reached
Price hit stop loss and trade closed with a market order.
Although price initially decreased after being filled, it met support at first trouble area at $3563 and rose from there.
Bullish movements in eth/usd preceded both the early spike which filled the trade and the subsequent rise that resulted in the stop loss being hit. Eth/usd can potentially be monitored as a leading indicator in current conditions.
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