BTC/USD Forex Signal: Double Bottom Facing Double Top? – 31 August 2022
Bitcoin is consolidating, finding buyers below $20k.
Previous BTC/USD Signal
My previous signal on 25th August was not triggered as there was no bullish price action when the two support levels which I had identified were first reached that day.
Today’s BTC/USD Signals
Risk 0.50% per trade.
Trades may only be entered before 5pm Tokyo time Thursday.
Long Trade Ideas
Go long after a bullish price action reversal on the H1 timeframe following the next touch of $19,616, $19,315, or $19,164.Placethe stop loss $100 below the local swing low.Adjust the stop loss to break even once the trade is $100 in profit by price.Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.
Short Trade Ideas
Go short after a bearish price action reversal on the H1 timeframe following the next touch of $20,532 or $20,782.Place the stop loss $100 above the local swing high.Adjust the stop loss to break even once the trade is $100 in profit by price.Take off 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to run.
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.
I wrote in my previous analysis on 25th August that the price of BTC/USD had room to rise and seemed unwilling to fall further, with no key resistance levels overhead until $22,713.
I was looking to buy a bullish breakout above $21,900 / $22k, as I expected the price to rise over the day.
I was wrong about the price rising, but I was correct that the area around $21,900 would be pivotal, as this area provided strong resistance which held the price down.
Since then, we saw a strong bearish breakdown as risk sentiment soured on 26th August, but the price went on to print a double bottom at the support level of $19,616 with both bottoms producing strong bounces. The price may now be topping out near the resistance level at $20,532 to produce a double top. If that happens, we will have a well-defined consolidation range between $20,532 and $19,616 which could be played by trading reversals at either extreme level.
The key thing to watch in Bitcoin is whether the price will get established below the lowest key support level at $19,163. There is no sign of this happening yet, but if it does, it will be likely to trigger a fast breakdown to at least $14k. The alternative scenario would be Bitcoin getting established above $22,713, which could herald the start of a major bullish reversal and a new bullish trend.
Over the near term, it may be wisest to stand aside from trading Bitcoin today, or at least until we see a convincing short-term bearish reversal at or near $20,532.
Concerning the US Dollar there will be a release of the ADP Non-Farm Employment Payrolls forecast at 1:15pm London time.
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