The technical setups posted below use simple trend detection, support and resistance, channels, pattern and candle analysis. We aim for high-probability trade setups on BTCUSD and use very few indicators.
All charts use BNC’s Bitcoin Liquid Index for maximum accuracy. The timeframe for trades is 1 to 7 days, so we’ll use 4h candlesticks. Bitcoin is best traded as a purely speculative commodity on 4h+ timeframes.
This section is based on Bitfinex Long vs Short (Buy vs Sell) trade Volume ratios.
1H Active Long : Short Volume Ratio: 2.76:1
6H Active Long : Short Volume Ratio: 8.52:1
12H Active Long : Short Volume Ratio: 4.88:1
We can see that there’s an excess of long positions, which can result in a long squeeze. This occurs when a sudden drop in price incites further selling, pressuring long holders to close their positions, protecting against a dramatic loss. The 1H data shows that shorts and sellers may be gaining ground, we will be keeping an eye on this over the next 24H. The bitcoin price has remained stable after the halving, indicating consolidation before the next move in direction.
Macro Key Points
This section is an overview of news headlines or events that may affect BTCUSD.
The bitcoin block reward halving has happened, BTC halving occur every 4 years (estimated) and there is just one more halving left. Bitcoin’s halving limits new Bitcoin supply by reducing the mining reward. The reward was recently reduced from 25BTC per block to just 12,5BTC per block.
BTC ETF’s are picking up momentum, the Winklevoss twins, founders of Gemini Exchange, recently fild to become a bitcoin trust on the BATS exchange. SolidX announced today that they filed for an ETF on the NYSE.
Since the recent strong breakout and subsequent pullback, bitcoin has slowly been moving sideways. Let’s review the general market setup on the daily chart.
What we see is that the current volume is less than we have seen when prior price trends reversed. This should signal that BTC is in a long term consolidation phase, and in an overall bull market.
We can also see that the price recently failed to close above the 50% fibonacci level ( a key area of support and resistance).
Long Tern Trade Ideas
The green zone offers good risk/reward entry zone. This is a clear area where bulls may be willing to enter and bears may be willing to cover.
Bitcoin may find it’s way into the green zone within the next week or so, and presents a good entry for a long position.
Short Term Technical Analysis
What we can see in the above chart is a bearish head and shoulders pattern with some volume consolidation. We can also see a bullish consolidation above some strong trend resistance.
Short Term Trade Idea
We have mixed signals on the direction BTC may go in. If BTC Breaks above $680.00, I wouldn’t oppose chasing (to buy during breakout). The technical patterns will then only have bullish indications of more upside, to at least $780.00.
If looking to short, look for the head and shoulders to confirm with a strong volume breakout. If the head and shoulders should complete its self, we should see BTC test the $520 range.
Based on the current long and short ratio, and the current price movements, we see the potential of a big move in either direction. The overall market is bullish, so if looking to short be aware you are going against the trend. The range and volatility are presenting great trades in either direction. We recommend waiting for one of the above trades to present themselves. Sometimes no trade is the best trade!
Disclaimer: The information presented in this article is general information only. Information provided on, and available from, this website does not constitute any investment recommendation.