Previous BTC/USD Signal

My previous signal last Wednesday were not triggered as there was no bullish price action when the support level which I identified at $20,153 was first reached.

Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered before 5pm Tokyo time Thursday.

Long Trade Ideas

• Long entry after a bullish price action reversal on the H1 timeframe following the next touch of $19,700, $19,315, or $19,164.
• Put the stop loss $100 below the local swing low.
• Move the stop loss to break even once the trade is $100 in profit by price.
• Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

Short Trade Ideas

• Short entry after a bearish price action reversal on the H1 timeframe following the next touch of $20,516, or $21,141.
• Put the stop loss $100 above the local swing high.
• Move the stop loss to break even once the trade is $100 in profit by price.
• Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote in my previous analysis one week ago that the short-term price action was bearish and suggested that the price may well now break down below the support level at $20,153. I thought however that the more distant levels at $23k and $19,164 looked likely to be more reliable as support and resistance.

I was correct about the breakdown but the levels I gave were not useful in the end.

A few days ago, BTC/USD and Ethereum were looking likely to make further dramatic price declines – I was waiting for a daily close here below $18,500 as a short trade entry signal. I was correct to look to this level as, to the surprise of many, Bitcoin and major cryptos seem to have held up from these lows.

The technical picture looks considerably more bullish, although the waves higher are a little choppy and quite deep. We do not only see higher lows and higher highs, but also a bullish base formed which seems to be turning into a cup and handle chart pattern, which would suggest the price is likely to rise with increasingly strong bullish momentum.

Before the price can make such a rise, it must break up past the resistance level at $20,516 which looks very significant. However, it is hard to pinpoint the level – it would be better to treat it as a zone around this price.

Overall, a daily (New York) close today above $20,516 would suggest the price is likely to continue rising to at least $21,141 over the coming days.

Concerning the US Dollar, there will be a release of JOLTS Job Openings data at 3pm London time, followed by the FOMC Meeting Minutes at 5pm.

As long as we continue to see a lot of negativity out there, I just don’t see how suddenly Bitcoin is going to be the asset everybody wants. We’re still trying to figure out what it’s used for.

The Bitcoin market tried to rally on Friday but gave back gains rather quickly. Because of this, it looks as if it is ready to give up the $20,000 region as support, and I think that we will more than likely see a huge fight on our hands. If we get a daily close below the $20,000 level, it opens up Bitcoin to fresh selling. There is nothing on this chart that tells me that cannot happen, and I expected this to happen over the weekend.

Bitcoin is going to continue to be very noisy and in the crosshairs of a lot of short-sellers, because crypto itself is in a lot of trouble. So much fraud has been discovered recently that crypto has very little confidence. When you are trying to get larger investors involved, the one thing that you will need is confidence. That is lacking, and I don’t see it coming back anytime soon. Because of this, I fully anticipate that Bitcoin will not only break the $20,000 level but go much lower.

My current price target is somewhere around the $12,000 level. Yes, I recognize that could be a bit of a shocking number, but just five months ago somebody told you Bitcoin was going to challenge $20,000, you would not have believed them. We are about to enter another “crypto winter”, which means that nothing in crypto is going to work anytime soon. This is probably the best thing that could happen to the industry, because you cannot have so many fraud-related incidents and keep up confidence. In other words, you need to flush out a lot of the bad issues. As long as we continue to see a lot of negativity out there, I just don’t see how suddenly Bitcoin is going to be the asset everybody wants. We’re still trying to figure out what it’s used for.

Over the last several years, it has been a store of value, which is preposterous considering it can lose 80% of its value. It had also been thought of as a hedge against central bank printing, but the central banks have changed and this has wiped out Bitcoin. It was also thought of as an inflation hedge, which is clearly not the case. At this point, it’s just a speculative asset and should be treated as such.