The Bitcoin-to-Dollar exchange rate on Monday surged 2 percent against the US Dollar from 6590-fiat to 6729-fiat on bottom formation sentiment and increased institutional investments.
The Bitcoin had a steady week, rising and dropping within a specific range with its trend facing upward. Many believe the digital currency has found its bottom and a massive investment from David Swensen, a prominent investor, made recently into two crypto funds have authenticated the speculation. It could be a reason Bitcoin is rejecting bears. The price yesterday almost formed a Doji on its uptrend, confirming an indecisive selling sentiment in the Bitcoin market.
From a technical standpoint, the daily chart could be interpreted marginally bullish, but assuredly so.
The daily chart shows Bitcoin has been rising steeply since June 28 lows but with extreme bearish pressure at the descending trendline above. It is still too early to fancy a long-term uptrend, especially because of the prevailing bull trap signals. As of now, Bitcoin is once again attempting a break above the falling ascending trendline. The weak action in RSI, which is a momentum indicator, make it more likely for Bitcoin to form higher highs upon closing the current candle. The Stochastic Oscillator somewhat tells the same story as that of the RSI.
As it stands, Bitcoin is in a bullish bias, but in reality, we might be heading into another bull trap. There are still conditions that could invalidate the trap if 1) Bitcoin breaks above the higher highs of September 5, and 2) Bitcoin does not close below $6,580.
We have switched to the 1H BTC/USD timeframe to understand our near-term opportunities before long-term gains. That said, the range we are watching today is clearly defined by 6663-fiat as our interim resistance, and 6580-fiat as our interim support. We have just confirmed a bear trap signal after validating a selling signal upon the higher high formation towards 6730-fiat – which is above our descending trendline.
We have placed a short position towards the near-term rising trendline as a part of our intrarange strategy. A stop-loss 2-pips above our entry position is minimizing our risks in case the breakout formation resumes.
At the same time, we are also opening a long position towards the previous higher high in hopes to squeeze out some small profit out of a potential breakout action. A stop loss order has been placed 3-pips below the entry position to define our risk management perspective.
Featured Image from Shutterstock. Charts from TradingView.