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 / Short trade ratios.
1H Active Long vs Short Volume Ratio: 12.69:1
6H Active Long vs Short Volume Ratio: 5.89:1
12H Active Long vs Short Volume Ratio: 3.71:1
24H Active Long vs Short Volume Ratio: 4.26:1
By looking at the long and short ratios we can see that there’s an increasing 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.
1HR data shows that significantly more long positions have been opened in the past 24 hours, but there has been little increase in price. This indicates that the bulls are getting sold into, further hinting that a long squeeze may be near. Bulls may be looking to enter at a better price before the Halving in less than one week.
Macro Key Points
This section is an overview of news headlines or events that may affect BTCUSD.
The bitcoin block reward halving is estimated to occur in 4 days. Assuming demand remains the same, the post-halving value per bitcoin is over $1350. Extrapolating this based on the current market price, the present value of one bitcoin is around $340 – an attractive entry price.
Since the recent strong breakout and subsequent pullback, the bitcoin has slowly trending higher. Let’s review the general market setup on the daily chart.
What we can see is that the volume at b. was the highest BTC has ever seen, and the volume that we are seeing presently is less than half of that peak. This is a good indication that the long term bullish trend has only begun.
Long Term Trade Idea
We have highlighted a zone which we feel 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 to the green zone within the next 4 days before the halving, and presents a good entry for a long position.
Short Term Technical Analysis
What we can see in the above chart is a bearish ascending pennant that resulted in a breakdown. The price bounced off Fibonacci support at 0.618, which is a key area of support. Note that the Volume didn’t breakout when the ascending pennant broke down.
Short Term Trade Idea
If looking to enter a long position, the buy zone area corresponds with the long term trade idea. If looking to short, we can see the the risk reward ratio is good. Since we are in a long term bull trend, we would suggest covering at the buy zone and taking it long.
Keep in mind that we are in a volume consolidation phase. We will have a clear trade when the volume breaks out of consolidation, which may be instigated by the halvening in just a few days.
Based on the current long and short ratio, and the current price movements, there is potential downside until the halving this week. The overall market is in a bull trend, 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 short term bear and long term bull trade ideas based on the available information.
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.