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 (Buy) / Short (Sell) Margin Funding Ratios
1H Active Long / Short Ratio – 37.46:1
6H Active Long / Short Ratio – 5.09:1
12H Active Long / Short Ratio – 4.15:1
By looking at the long and short ratios we can see that there’s a growing 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. 1H data shows a dramatic growth in long positions, keep an eye on this over the next 24H.
Macro Key Points
After the Halving, It has been a slow for Bitcoin news, We found one developing story in the past week that we thought was interesting
Russia to Treat Bitcoin as Foreign Currency and Enable Trading – Deputy Finance Minister Alexei Moiseev clarified that Bitcoin mining will remain illegal, while buying and selling the crypto current will be classified as a foreign exchange transaction in upcoming legislation.
House of Lords told Bank of England’s digital currency is ‘some way off’ – The Bank of England’s Deputy Governor of Monetary Policy, Dr. Ben Broadbent, states that a central bank digital currency was “some way off,” adding that it would face technological and policy barriers, since it would involve a significant restructuring of the financial system.
Long Term Technical Analysis
Let’s review the general market setup on the daily chart.
Since January 2015, when Bitcoin trading volume reached all time highs, we have seen the price consolidate, and the trend reverse. Volume has also been consolidating, while the peaks have been decreasing.
Long Term Trade Idea
We may be in a very long consolidation period, trading within the $660 to $600 range for the next 3-4 months. If looking to long, we suggest waiting for an entry point around $600.00. If looking to short, we suggest setting stops at $675 with a potential target of $600
Short Term Technical Analysis
It’s hard to ignore this large pattern. The price has been going sideways since the halving and has since created a tight triangle. A break in either direction indicates a trade opportunity.
We would recommend taking a long or short position after price breaks out of this triangle. If price breaks out to the upside, look for a target of $725-750. If the price breaks out to the downside, look for $600.00. The current price of BTC is $661.
Based on the current long and short ratios, and price movements, there is potential for a big move down. The overall market is in a bull trend, so if looking to short, be aware you are going against the trend.
The lack of BTC news as of late has not helped the sideways price action. When BTC breaks out of this triangle, we should see a large move in the given direction.
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.