Earlier today, in the first of our twice-daily Bitcoin price watch pieces, we documented the breakout above $400 we saw last night. Traditionally, strong psychological levels (such $100, $200, $500, $1,000 etc.) will initiate the kind of volatility we saw on the break, and when they are broken to the upside, will often retest as support. Conversely, but similarly, when a key level breaks to the downside, it will often retest as resistance.
In this instance, however, we’ve not seen this retest. Price has stayed buoyant despite the inevitable run of profit taking, and this suggests there is some underlying fundamental strength in play. A such, while we will still take a short position if our breakout strategy dictates that we should, we are going to keep our risk parameters tight and well defined. We don’t want to get caught on the short side of a run towards 500, for example.
So, and with that out of the way, where are we looking to get in and out of the markets this evening, and what are the levels in focus? As ever, take a quick look at the intraday chart below—it illustrates the Bitcoin price movements on a 15 minute per candlestick timeframe.
The first thing you will notice is that the range we are trading in tonight remains unchanged from the one we have been focusing on today. In term support comes in at $412.16 (as defined by the spike down earlier) and resistance at $425.02. These are the levels to watch going forward.
If we break below support, we will look for a tight scalp entry towards $404, with a stop at $414 defining our risk. Looking the other way, and in line with the overarching bullish momentum, a close above $425.02 would put us long towards $435 flat. A stop on this one somewhere around current levels ($420, or so) keeps things attractive on the risk side.
Charts courtesy of the lovely people over at Trading View