The technical setups posted below use simple trend detection, support and resistance, channels, pattern and candlestick analysis. We aim for high-probability trade setups on BTCUSD and use very few indicators. All charts use BNC’s Bitcoin Liquid Index for maximum accuracy.
The timeframe for trades is 1 to 7 days, so we’ll use 4h candlesticks. Bitcoin is best traded as a purely speculative commodity on 4h+ timeframes.
This section is based on Bitfinex Long (Buy) / Short (Sell) Margin Funding Ratios
1H Active Long vs Short Volume Ratio – 2.70:1
6H Active Long vs Short Volume Ratio – 1.69:1
12H Active Long vs Short Volume Ratio – 1.44:1
24H Active Long vs Short Volume Ratio – 1.30:1
By looking at the long and short ratios we can see that there’s a balanced ratio of long and short positions. The Data shows significantly more short positions have been opened in the past hour. This may result in a short squeeze, where shorts rush to exit a losing position.
Macro Key Points
This section is an overview of news headlines or events that may affect BTCUSD.
With all eyes on the Ethereum Fork debacle, this is raising concerns if BTC should fork to solve the “scalability” issues of BTC.
Decentralized Exchange, OmniDEX, offers fee free trading
JPMorgan Chase urges asset managers to adopt blockchain
Long Term Technical Analysis
BTC has been in a long term up trend. Even after today’s pullback, we are still in an up trend, with solid volume. The Stochastic Relative Strength Indicator (RSI) is 0, which means the the bears may get exhausted soon (oversold).
Long Term Trade Idea
The above chart shows that BTC may be setting up for a Bull Pennant pattern, which would signal further upside potential. Again, with the RSI at zero, that should indicate that a bottom is near. A great area to accumulate BTC would be in the $620.00-$600.00 area, stops should be set below $600.00.
Short Term Technical Analysis
Last week, BTC completed its Bear Pennant pattern as shown in the above chart. In what was a rather delayed response, BTC took a dive today. Another Pennant looks likely, which would be considered a Bull Flag pattern. BTC will probably consolidate over the next week, in the area circled.
Short Term Trade Idea
This short term trade idea corresponds directly with the long term trade idea. The 4HR chart above shows where there could be some sideways action, forming the Bull Pennant.
Based on the current long and short ratio, and the current price movements, there is a potential reversal in the near term. The RSI is sitting at oversold levels, which is a good indication to start building a long position.
Disclaimer: The information presented in this article is general information only. Information provided on, and available from, this website does not constitute any investment recommendation.