Yesterday, as a result of overnight trading on Tuesday, a double top gave us a medium term bearish bias in the bitcoin price. The pattern completed mid afternoon, and we were able to enter short according to the pattern’s traditional rules on a neck breaking. Post-entry, price initially moved in the direction we’d expected, before correcting a little to the upside and consolidating somewhat throughout Wednesday evening. This is not unexpected, and the bearish trade we entered on the pattern yesterday remains valid. On the short term timeframes, at least, we’ve some some medium term upside action, and with the pattern confirming the end of this action, it’s not unusual to see some sideways consolidation, as markets take stock of what’s underpinning the volatility.
With this said, we’d like to see (from a short term perspective) a dip in the bitcoin price towards our downside target. We’re hedged to the upside on long term holdings, and we’ve got a stop in place to ensure that if the bitcoin price reverses to the upside and continues its bullish run then we only get taken out for a small loss, but a profit is a profit, and we’d like to take one as we head into the back end of the week.
For those yet to enter today, or for those with the bearish entry in place who are looking to pick up a second position, the chart below details the parameters we’re focusing on for this Thursday, European morning session.
As the chart shows, the range we are looking at today is defined by in term support at 420.5, and in term resistance at 423 flat.
A close above the latter of these two levels will signal a long position towards an upside target of 426 flat – stop at 421 to define risk.
Looking south, a close below in term support signals short towards 415, with a stop at 422.5 to keep our risk tight.
Charts courtesy of Trading View
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