Direct from the desk of Dane Williams,
exclusive to leofinance.io
Key Takeaways:
- Bitcoin has dropped through daily support.
- While still in an overall bullish trend, this could change in an instant from here.
- Our bias shifts to only looking to trade Bitcoin from the short side.
Bitcoin Technical Analysis
Okay, now things are about to get real.
I've talked about my market philosophy on the blog quite a bit, sharing my opinion that price action in between daily support/resistance zones is largely nothing more than noise.
In a strong bullish trend like that which Bitcoin has been in for the last 6 months or so, any pullbacks after strong breakouts really don't matter.
But for the first time in a long time, Bitcoin is now dropping through a daily support zone.
Take a look at the daily chart below.
BTC/USD Daily:
I'm literally watching the bears take control as they drive price down through our daily support zone.
With this break, our day trading bias shifts to only wanting to trade Bitcoin from the short side.
In order to look for an entry, let's now zoom into an intraday chart and take a look at the price action as price drops through daily support.
BTC/USD Hourly:
On the Bitcoin hourly you can see that there doesn't look to really be anyone willing to catch the falling knife here.
At least nobody with deep enough pockets to stop the march of the bears and we're likely to go through the zone without much trouble.
With that in mind, this might be a nice opportunity to ride on the bear's coattails and take advantage of this momentum drop.
There's no doubt that the path of least resistance right now is down and that's the direction we want to be trading, at least in the short term.
Why fight against the tide if we don't have to, right?
So how should you attack this daily support break?
The exact same way that we always do, of course.
Wait for a short term support zone (hourly green candle), to be retested as resistance and use that as an entry signal.
This allows us to keep our stops tight and target 1:3 risk:reward on the trade on the initial momentum move.
Best of probabilities to you.
Data to Watch:
- Not applicable on decentralised cryptocurrency markets.
Why not leave a comment and share a chart of your own in the comments section below? All comments that add something to the discussion will be upvoted.
This daily market analysis blog is exclusive to leofinance.io.