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High US CPI data today may cause further bearish breakdown.
Previous BTC/USD Signal
My previous signal last Wednesday was not triggered as there was no bearish price action when the resistance level which I had identified at $20,516 was first reached.
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 $19,315, or $19,164.
- Place the 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 $20,041, $20,280, $20,516, or $20,690.
- 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.
BTC/USD Analysis
I wrote in my previous analysis last Wednesday that the price action was beginning to look bullish despite the long-term bearish trend, showing a cup and handle chart pattern, which suggested the price was likely to rise.
I thought that a daily (New York) close above $20,516 would suggest the price was likely to continue rising to at least $21,141 over the coming days.
I was correct to look to the bullish side, as the next few days saw a rise in the price, although there was no daily close that above $20,516.
After making a recovery from very key lows around $19k, the Bitcoin price bounced back, but began to fall again over recent days as risk sentiment deteriorated in the markets, which usually causes a selloff in Bitcoin.
The price is now resting and weakly consolidating just above the support level at $19,315. I suspect the price will move little until the US CPI data is released later, and if that data is higher than expected, Bitcoin will be likely to fall and possibly even make a technically significant breakdown. Although the lowest nearby key support level is at $19,164, I think the really significant area to watch is $18,500 – if we get a daily close below that level, I see BTC/USD falling at least as low as $14k quite quickly, and I would be happy to take a short trade at such a daily close.
Alternatively, it may be that these two nearby support levels hold, and that we even see a spike up in Bitcoin to at least one of the resistance levels after the CPI data. If that happens, a short trade on a low timeframe bearish reversal following a spike up could be an interesting day trade, say from $20,041 or $20,280.
Concerning the US Dollar, there will be a release of CPI data at 1:30pm London time.
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