BTC/USD Technical Strategy: Traders Are Positioned for Dip-Buying

In 2015 we began covering Bitcoin but due to the right range the cryptocurrency was held we decided to abandon the coverage. We have noticed the volatility has picked up and made a decision to consider renewing our Bitcoin technical coverage for online traders in various exchanges and CFD’s. We have been providing trading signals in global markets such as Forex, Commodities and Indices since 2014 with a transparent track record as evident from our trades performance. Our Bitcoin trading strategy is currently free and may be accessed by all Bitcoin traders.

What has contributed to our decision was the immense demand for zcash, which is trading at $735.33 at the time of this writing. The extraordinary demand for Zero cash or Zcash (ZEC) for short. Zcash is very similar to Bitcoin where only 21 million coins will ever be released to the market overtime. One of the key differences is the greater anonymity it provides to the buyer and the seller in online transactions as opposed to Bitcoin. We cannot provide any form of analysis on Zcash until we have more historic data on the cryptocurrency. If we attempt to compare Zcash to an Initial Public Offering (IPO) in the stock market the price often retraces lower before correcting higher. However, due to the limited supply of Zcash we cannot conclude this will indeed be the case. We believe Zcash is responsible for the recent gains in BTC in the market.

BTC/USD Monthly Chart

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Bitcoin Monthly Chart 30/10/16

Bitcoin Monthly Chart 30/10/16

Please note the chart we are using represents Friday’s price at the close of the leading financial markets and we are aware Bitcoin’s price has soared price the $700 mark.

The monthly chart painted a reversal pattern known as reversed Head-And-Shoulders (H&S). As we near the monthly close on 31 October, a close above $670 may suggest further gains are in store, targeting $800 initially. What often follows a break above the neckline ($670) is a re-test of the breached neckline. Based on the monthly chart Bitcoin traders may exercise dip-buying strategies should the price approach $670 after the monthly close.

Bitcoin 60min Chart I

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Bitcoin 60min Chart I 30/10/16

Bitcoin 60min Chart I 30/10/16

Bitcoin 60min Chart II

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Bitcoin 60min Chart II 30/10/16

Bitcoin 60min Chart II 30/10/16

The hourly chart affirmed a bullish flag by breaking above the resistance as we know Bitcoin is trading over $700 at the time of this writing. The target of such a pattern is often measured by the flag pole (vertical black line). From a technical angle it is too late to jump on the bullish train. We would expect the gains to subside if the price trades between $745 – $748 at the hourly close as the flag’s objective has been acquired. Upon testing $748 we would expect the price to retrace lower towards $720, which is a healthy 50% retracement, measured from the flag’s breakout.

The monthly chart does not conflict the hourly chart as it is often used for long-term trades. We would like to provide a protective stop (stop loss order), which is an order that is used to prevent steeper losses. For example, if we buy bitcoin at $700 as expect the price to rise, we would set an order to sell those bitcoins at a lower price ($650 for example) so even if Bitcoin drops below $600 we would not incur a hefty loss and can always buy Bitcoin again at a lower price. For the monthly chart is it is too early to suggest stop, for the 60min chart (intraday time frame) the stop is often placed above the hourly high once the price obtains the flag’s target.

Last Updated on December 11, 2016