In this morning’s analysis, we noted that – given the action we had seen in the bitcoin price across the past few days – price was due to find some level of support near term. When we see action like this, specifically, downside action to the degree that we have seen the over the last week or so, there always has to be a point at which price finds some support, and markets consolidate. That is, the short sellers take profits off the table, and the buyers enter the market in the attempt to pick up a discount exposure to the assets in question. In this instance of course, the asset is bitcoin.
Well, a look at today’s action, suggests that this point has come. Price bottomed out earlier this morning, and has since managed to muster some degree of near-term recovery, running up throughout today’s European session and picking up a little bit of the lost strength as it went. Just how long this momentum will continue, remains to be seen. There is no real way of us forecasting it, other than to base it on longer-term trends, and that’s not what we are here to do.
Our game right now, is short-term intraday trading, and that is what we’re going to focus on for the purposes of this discussion. Take a quick look at the chart below to see our range in focus for this evening.
As the chart shows, the range we are looking at is slightly wider than normal, defined by support to the downside at 772 and resistance to the upside and 791. A break of resistance will put as long towards 800. A close below support will signal short toward 764. A stop on both positions is necessary to ensure that we are taken out the trade in the event of a bias reversal. Somewhere around a few dollars above support on the short trade, and a few dollars below resistance on the long trade looks to work just fine.
Charts courtesy of SimpleFX