Yesterday we saw a profitable long trade from the bullish bounce at the support level of $18,300. Any remainder of this position is probably best exited for profit now as the price is looking less likely to travel much higher over the short term.
Risk 0.50% per trade.
Trades may only be entered prior to 5 pm Tokyo time Wednesday.
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Long entry after a bullish price action reversal on the H1 time frame following the next touch of $18,882, $18,674, $18,330, or $17,900.
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Put the stop loss $50 below the local swing low.
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Adjust the stop loss to break even once the trade is $50 in profit by price.
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Remove 50% of the position as profit when the trade is $50 in profit by price and leave the remainder of the position to ride.
Short Trades
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Short entry after a bearish price action reversal on the H1 time frame following the next touch of $19,864 or $20,000.
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Put the stop loss $50 above the local swing high.
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Adjust the stop loss to break even once the trade is $50 in profit by price.
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Remove 50% of the position as profit when the trade is $50 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 movement that occurs at the given levels.
I wrote yesterday that as the bullish rise really seemed to have run out of steam in the area of resistance between $18,674 and $18,882, I took a cautious bearish bias but would monitor any trade carefully on short-term time frames. However, I also thought that if the price did get established above $18,882 later, that would be a bullish sign suggesting we may see a test of the all-time high price just below $20,000.
This was a good call as the price only continued down as far as the next support level during the initial bearish move, so hopefully, the short-term time frame reversal seen there would have been enough to give an exit from a short trade without loss. Later, the bullish break above $18,882 could have produced a profitable long trade entry which could have been ridden up to the all-time high which was tested yesterday as I predicted.
The price just got a tiny fraction higher than the previous all-time high price before pulling back, so as anticipated, there is resistance there. We are now seeing a short-term consolidation between that high and the likely new highest support level at $18,882. Although we may get a new all-time high today and maybe even a break above the huge round number at $20,000, this feels unlikely.
It may be best to stand aside and wait for the price to get established above $20,000 before entering any new long trades, although committed trend traders may wish to look for a long entry following a pullback to $18,882 and a bullish bounce there if it sets up. I prefer looking for a new long trade following any strong bullish breakout above $20,000. It may be that Bitcoin fails at or near $20,000 and gives an opportunity for a medium to long-term short trade, so it is worth keeping an eye out for either a long or short trade.
Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3 p.m. London time when the Chair of the Federal Reserve will also begin testifying before Congress.
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