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The price of Monday's bitcoins showed no significant movement after recording an impressive rally early Friday. This does not mean, however, that the flagship gathering of cryptocurrency is over.
At the time of writing this article, the exchange rate between bitcoin and the dollar (BTC / USD) was trading at $ 3,598, up 0.05% since the opening of the session Asian. The pair is consolidated laterally before US trading hours in a narrow – and rather weak – bearish channel. In a broader perspective, this channel has suggested a bull short flag formation.
The Bitcoin flag – and what it means
BITCOIN 4H CHART | SOURCE: COINBASE, TRADINGVIEW.COM
Technically, a bull flag formation is a signal for an extended upward action. It is represented by a consolidation period, similar to that of the Coinbase graph above. However, since it is the first of many potential bull flags, its longevity can be questioned. That being said, if the price manages to attempt a breakthrough upward, coupled with an increase in trading volume, the bullish flag would be confirmed, and we will see bitcoin retest the $ 3,800 goal – the trend line decreasing in the short term. represented in red.
Conversely, if we break down instead, then bitcoin could first look for red help on the moving average of the 200 periods. If it is broken down, the 50-period moving average should help hold the sell action.
An extended stay inside the bullish flag would increase the likelihood of a crash action. This is evident in the past movements of our 4H RSI moment indicator. In the graph above, you will notice an eclipse encompbading the RSI action between Jan. 7 and Jan. 14. We can see the momentum indicator entering its overbought sentiment zone above 60 and then correcting itself lower. Then he finds support above 57, followed by a possible break-up to an over-sell region.
In the current action, we can see the RSI 57.7 support. According to our theory, a break below this level could excite bears. At the same time, if RSI continues to be above 57.7%, he could then confirm the next rebound to $ 3,800 – as mentioned above.
Intraday badysis of Bitcoin prices
BITCOIN 1H CHART | SOURCE: COINBASE, TRADINGVIEW.COM
As bitcoins operate in a narrow channel, there are other profitable opportunities for day traders. A rebound of the flag support would bring us into a long position vis-à-vis the resistance of the flag. At the same time, a stop loss order of less than 1 position below the entry position would define our risk management.
Conversely, an action of withdrawal of the resistance of the flag would allow us to open a short position towards the support of the flag. In the meantime, we will maintain a stop order over the entry position to minimize our losses if the bias reverses.
Regarding our escape strategy, a higher resistance than the flag would allow us to target $ 3,800 as a rising target. However, in the event that the bearish action takes over, we would wait for the bitcoin price to fall below the flag's support. If this is the case, we will enter a short position on the moving average of the 200 periods at that time.
Featured image of Shutterstock. TradingView Price Charts.
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