In the first BTCUSD analysis in June, I made a point of patience and the simple fact that price moves in two distinct directions; up and down. Not surprisingly after the analysis was posted the price has, in fact, moved down and then up. It’s not my intention to be facetious, but of course the simplicity of this fact seems to fly’s over the heads of any hodler or bias-fueled traders.
In this update, I’ll review the previous chart from June, check to see what’s happened with the ranges that I marked, and then look at the current price in a little more detail.
So below is the daily BTCUSD chart with the same ranges. As expected the price moved down into zone 2 – kicked out some long positions, encouraged a flurry of new short positions – and bounced back up into zone 3. Since then the price has continued up and above the top of zone 2 at $7800, made a high at $8500 and is currently consolidating between these two levels.
$7800 was a very important level. If price sustains above this, then the next key point is a new break high of the recent top at $8500. There are a couple of simple reasons that longs are in favour above $7800. The first is that 7800 has been resistance, then support. This price has been tested quite a few times since Nov. 2017 – ‘markets have memory’, remember that!
The general picture is that zone 3 is in play with key support at 7800. With a solid trend from the recent macro low, around 5650, longs have been in favour since the formation of this trend and continuation can be considered as the most likely outcome. However, one must always be able to consider the opposite and stay vigilant for price stalling and reversing. If 7800 fails, that’s a major warning sign, however this trend can stay alive all the way down to $7225.
The safest entry is the continuation of trend, the break of $8500 – as outlined in the 4th chart below, but position-risk and entry-management may vary based on which timeframe you chose to manage on. As always, the trend is your friend, and the trend here is on the daily. A look through some lower timeframes will allow higher resolutions to be investigated for possible entries and stoploss placement.
If price does break high again and continues the trend, what kind of targets are in play? The chart below shows some near-term levels of interest including the bottom of Zone 4 at $11,200 and top of Zone 3 at 11,800. Also, there are three channels where I expect some interaction – areas to reduce risk and/or take profit.
Always look for volume to carry price! If the price edges higher but the volume isn’t following then there’s a fair chance the trend is running out of energy, so reducing or exiting positions until more favourable circumstances are available may be the best option. This is one facet of managing risk, but you can’t manage risk unless you know what your managing. So, practice, practice, practice. As always, make your own decisions. It’s possible I’m some maniacal idiot who thrives on other traders losing money (I promise that’s not the case #sweatysmileyface), so… you’re the boss, it’s your time and money, so careful that you’re learning, first and foremost, to make your own trades. Good luck!