The bitcoin price on Tuesday continued to pursue its downward trajectory, albeit finding decent support at one of the downside targets. The climate is not favorable for establishing long-term positions, but a few well-timed day trades can help you make the most out of the market’s recent bearish turn.
BTC/USD opened the Asian trading hours at $3,433, down 0.43 percent from yesterday’s high. The pair fell as much as 2.87 percent as the session matured. It established an intraday low at $3,337 before correcting higher during the European trading session. As of 19:00 UTC, bitcoin was trading at $3,409, marginally lower from where it opened the day.
From the look of it, bitcoin is finding a decent footing above $3,337. The odds are that the digital currency will extend its bearish momentum – it will break below its newfound support to pursue a double bottom scenario towards the temporary bottom area above $3,100. If things go worse, as predicted by a Bloomberg analyst, the bitcoin price will crash to as low as $1,500.
Such a robust bearish bias does not make bitcoin a favorable market for long term entries. Not unless the digital currency establishes a reliable bottom area and price stops rejecting the higher high formation.
Therefore, it is wiser to switch to day trading until the strong fundamentals (Bakkt, Fidelity) materialize. It means making the most out of bitcoin price’s intraday signals. The trick is to identify price reversal patterns and open a short/long trade according to the next nearest target level.
The BTC/USD pair is now trending inside a minor descending channel, which consists of two negative sloping trendlines: one support and the other resistance. The channel has lately identified reversal on both support and resistance levels, which could bring adequate opportunities for day traders.
As of now, bitcoin is testing the resistance trendline for a potential pullback towards the support trendline. Therefore, traders could open a short position towards the support or $3,254 following the next touch of the channel resistance. At the same time, they should place a stop loss order 1-pip above the local high so to minimize their losses in case the bitcoin price breaks above the channel resistance level.
Similarly, traders could open a long position towards channel resistance or $3,448 following the next test of the support of the descending channel. They should also maintain a stop loss order 1-pip below the local swing low.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 12:52 PM UTC