Chart of the Day: Bitcoin Fake Out Shakes Out Bears In Short-Term
Investing.com | Jun 14, 2021 21:34
The price of Bitcoin has been gyrating wildly, going back and forth on its trend.
We started warning of a fall in the price of the cryptocurrency on Apr. 11 and again in mid-April, when Bitcoin was hitting all-time highs. We issued an outright sell call on May 6, when the price was climbing past $58,000 and set a target at $30,000 and have reiterated our position a number of times since.
On May 20, after the digital token leader fell below $40,000, we suggested it may recover, but then on June 8, we identified a short term bearish pattern and entered that into our trajectory. That short-term bearish pattern, however, flipped, and now we’re starting the next chapter in the adventures of Bitcoin.
The digital asset has entered a short-term uptrend.
Bitcoin blew out its bearish pennant, forcefully reversing the market mechanism. That kind of about face can produce a powerful move in the opposite direction to the one traders originally intended.
If traders expected the pennant to lead to a fall and shorted the contract, now they are forced to buy Bitcoin to return it to the broker, adding to demand. This sudden upward push is liable to motivate bulls to jump in haphazardly.
In addition, traders looking for a trade may think they recognize one and add their weight into the position. In this scenario, we have most of the market pushing in the same direction—upward.
Having said that, it’s important to keep your bearing. When Bitcoin is above $44,000, it extends the neckline of a H&S top, which may still be a stronghold of supply. Therefore, at this point, we are considering the price between $37,000 and $43,000 as fair game—the space between support and resistance—and we are trading amid these prices.
Trading Strategies – Long Position Setup/h2
Conservative traders should wait for the price to trigger a return move to verify support above the wedge.
Moderate traders would wait for the same dip, for the better entry, if not for further confirmation.
Aggressive traders could enter at will, provided they are acting according to a predetermined, coherent plan that reflects their risk tolerance and has an exit strategy. Here’s an example:
Trade Sample
- Entry: $38,000
- Stop:Loss: $37,000
- Risk: $1,000
- Target: $42,000
- Reward: $4,000
- Risk:Reward Ratio: 1:4
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.