BTCUSD Intraday Strategy: Trading with the Algorithms

Bitcoin Trading Strategy

In our prior Bitcoin trading strategy we failed to mention the recent surge in the cryptocurrency has been triggered by Japan. Japan authorized Bitcoin as a legal payment method, which sent the cryptocurrency into historic highs. The main trading volumes are coming from Japan rather than the resit of the world. We have also noted high demand for Bitcoin in South Korea and China.

Many of the Bitcoin’s fans are unfamiliar with the trading world. We are expecting Japanese investment firms to launch trading algorithms into the cryptocurrency, which is likely to reflect in an abnormal volatility across the exchanges. We are not convinced Bitcoin will continue posting significant rallies as it has done so far. In our Bitcoin trading strategy we are continuing to focus on intraday time frames.

As time progresses we may also focus on the daily and weekly charts but at the time of this writing we find intraday time frames to be the most appropriate for the technical trading signals that we derive from the charts. As a reminder we have been providing forex trading signals since 2014 with extreme transparency and extensive track record.

Bitcoin 4hr Chart

Please click on the chart to enlarge:

BTCUSD 4hr Chart 05/06/17

Intraday Analysis

We have noted an established intraday uptrend in BTCUSD. Joining the uptrend however is fairly difficult as the dips that would often allow to join the trend are minimal at the time o this writing. Our approach would therefore lean towards selling Bitcoin rather than attempting to buy at current levels.

The nearest resistance level is seen at $2,645. Bitcoin may maintain its uptrend until the resistance but it is not guaranteed to materialize. Instead, we are focusing on the 21 Moving Average (MA, in blue). The 21MA is acting as a fairly strong support, inline with the current uptrend. A break below the 21MA may pave the way for stronger selling, a correction to the recent gains.

A firm break below the 21MA may suggest further selling are due to take place. The objective of the selling may be the 55MA (in black) although we must pay attention how the price reacts if it reaches $2,340, which may offer some support to the potential retracement.

The MA’s strategy is relevant as long as Bitcoin does not reach $2,645, Should BTCUSD test $2,645 we may update the strategy based on the 4hr chart.

BTCUSD Fundamentals

There are numerous fundamentals to consider in Bitcoin, starting from blockchain news to legal actions that may take place. We cannot pinpoint which possible event trigger extraordinary volatility in BTCUSD. We therefore assume that trading algorithms will be the main driver across the cryptocurrency markets.

Despite the suggestions that hedge funds have yet to present themselves in BTC markets it is merely a matter of time. The volatility may ultimately lead to the development of sophisticated algorithms. As the regulations are currently minimal ‘chaotic’ price movements may probably take place within the next 6 – 12 months.

This is our last Bitcoin trading strategy we will be offering for free for all traders. Future trading strategies that will also focus on Ethereum (ERCUSD) will be for subscribers only. For more info please feel free to contact us for more details.