It’s morning time in Europe again, and as such, time to put forward our first analysis of the day in the bitcoin price. We’ve been craving some volatility over the last few days, and action last night finally gave us that volatility. Having initially gained to overnight highs just ahead of 455, price looked pretty solid this morning as the European session opened. However, as we write this, price has collapsed to carve out intraday lows at 451.45. Exactly what is driving this selloff is unclear. It may just be that short-term speculators are pulling profits out of the market on the back of the recent gains. In which case, we would expect the downside momentum to abate, and eventually reverse. If this happens, we could see a closing of the gap and and run back towards highs. It’s speculation, at this point, however, and so we need to set up on both sides of the market. With this in mind, and to get an idea of the levels we are focusing on for today’s morning session, take a quick look at the chart below.
As the chart shows, in term support comes in at the aforementioned overnight lows of 451.45, while resistance comes in at overnight highs of 455.27. It’s a five-dollar range, so long at support and short at resistance on an intrarange effort works nicely. Stop loss just the other of the entries to define risk.
From a breakout perspective, if price closes below support it will signal shorts towards a downside target of 445. A stop loss on this one somewhere in the region of 452 flat works well. A close up above 455.27 will signal a long entry towards 464. Stop loss at 454.25 to keep things tight from a risk management perspective.
Price is moving fast, so make sure to define risk parameters on every entry in order to avoid getting caught on the wrong end of a reversal.
Charts courtesy of SimpleFX
Header Image via NewsBTC