So we are about to kick things off for another day of trading in the bitcoin price, and action overnight has been pretty interesting. Our primary focus yesterday was the seeming consolidation of bitcoin throughout the early morning session, and what this might have suggested about what we could expect going forward. Specifically, when we see consolidation like this, it generally signals the end of a longer-term, overarching trend, and points towards a shorter term reversal. With the overarching trend being to the downside of late, a reversal would suggest we were in for some upside momentum, and this is just what we got.
Price ran from around the 820 mark to reach early morning highs of 909, before correcting down to somewhere in the region of 890. This run up, and subsequent correction, has given us some pretty solid levels to go at for today, so let’s get these levels defined, and move forward into our strategy. As ever, take a look at the chart below to get an idea of what we’re focusing on. It is a five-minute chart with overnight action displayed, and it has our range overlaid in green.
As the chart shows, the range in focus for today is defined to the downside by 891, and to the upside by the above-mentioned highs at 909. There is probably just enough room to go at price intrarange here, so long at support and short at resistance. Standard stop loss rules apply.
If price breaks through resistance, we will look to enter long towards an immediate upside target of 920. A stop loss on the trade at 906 defines risk. Conversely, a close below support will signal short towards 882. On this one, a stop at 896 (somewhere around current trading levels) will ensure we are taken out of the trade in the event of a price reversal.
Charts courtesy of SimpleFX