September 21, 2017

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Bitcoin Price Collapse; Just a correction?



Last night we published our second of our twice daily bitcoin price watch pieces ahead of the Asian session. The primary thesis behind the piece was that we would be tightening up both our range and our risk parameters, with the goal of reducing our exposure to any correction in the bitcoin price overnight while also leaving us open to draw a profit from any action. Price has now matured across the session, and we are now mid way through Thursday’s European trading. So, at this point, how did price fare overnight, did our strategy get us in and out of the markets as a response to yesterday’s volatility, and where are we looking to get in and out today? Take a quick look at the chart.

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As you can see, the bitcoin price collapsed overnight to break lows just ahead of 360 flat. We have since bounced a little bit to return to trade above 400 – a level around which we are currently trading. With this action taken into consideration, in term support for today sits just ahead of lows at 368.15, and in term resistance at mid morning highs of 401.65.

We will stick with the bulls first, and look for a break (and close) above in term resistance at 401.65 to validate a medium term upside entry with an initial target of 410 flat. We will set a secondary target of 448 (daily highs), taking half our profit off the table at 410, shifting our stop to our entry and leaving the trade open in the hope we can pull further risk-free profits on the shuffle trade.

Looking the other way, we can do one of two things. Price is currently trading around in term resistance. If it corrects to the downside, we will look to enter short towards in term support with a stop just the other side of resistance to define risk. Next, if we break support, we will look to enter a second short towards 355, with a stop at 371.

Charts courtesy of Trading View



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