Hello Steemit,
Hope everyone is doing well this morning. I went ahead and drew up some graphs to show my take on the current conditions of the BTC/USD market. I hope you find it helpful!
Disclaimer: I use BTC-E to trade, all levels shown here will correspond with other exchanges but the prices might be a bit different. Regardless, you can use this to your advantage. If Chinese exchanges are leading the pack, then watch the largest Chinese exchange for your break out. It nearly always comes before the USA/UK exchanges and will give you an entry/exit advantage.
I am not a financial adviser but I do actively trade any "trade ideas" that I publish. This post represents my personal opinion and in no way should be considered a recommendation. Please make sure to do ample research and form your own opinion before deciding to partake in a trade. Trading is a risky endeavor, only trade with what you are willing to lose.
The graph below represents BTC/USD on a Weekly chart.
In the above chart we can see that bitcoin has been on a rather nice bull run for the last year and has supported the rising trend line for many months before it was finally tested briefly this week after the Bitfinex hack. The MACD has been rising throughout this time which indicates that the long term trend is still intact despite the recent turn downward in price. The RSI has fallen from it's previous severely over-bought levels for now and indicates that we are currently in a corrective move.
The graph below represents BTC/USD on a 1 Day chart.
This Daily chart helps illustrate some of the points I was trying to make in the last graph. First, I want you to see the three green circles, these are showing where major resistance has turned into support. Previously, the $463 price level was the top and once price broke above it the market moved sharply higher over the next few months.
Now see the final green circle to the right? This is the level that was used to support the market during the recent price decline. This, mixed with it's previous importance, indicates that this level will be important in the future as well.
Long Term Trade idea: If price retraces back to and stays above the levels marked as the "Buy Zone" ($460-$490), I will go long/purchase bitcoins. If price breaks below the $460 level, I would no longer consider this trade idea valid and wait until better patterns arise.
The graph below represents BTC/USD on a 4 Hour chart.
After the dip in price, bitcoin recovered strongly and is currently trading flat on the 4 hour chart. The low is $562 and the high is $578. These levels could potentially be used to trigger a short term trade in either direction.
The graph below represents BTC/USD on a 1 Hour chart.
The graph below represents BTC/USD on a 1 Hour chart.
Short term trade idea: If price breaks above $578, go long with a stop loss @$559.97 and a profit target of $635 and above. This gives you a risk of $18.88 per btc and a potential reward of $56.15 per btc.
Risk to reward ratio of 1/2.7 (for every $1.00 you risk you stand to make $2.70 profit)
Next, I will show the flip side of the trade if price decides to break lower instead.
The graph below represents BTC/USD on a 1 Hour chart.
The graph below represents BTC/USD on a 1 Hour chart.
If price decides to break below instead, enter short at the $562 level with a stop loss @ $580.02 and a profit target of at least $533-$526. The $533-$526 level isn't super strong support so watch for a potential break lower.
Profit Target #1 = $533-$526, Profit Target #2 = $500-$482, Profit Target #3 = $480-$460
You stand to lose $18.02 per btc and stand to profit (T1 = $29/btc, T2 =$62/btc, T3 = $82/btc)
This leaves you with a Risk to Reward ratio of 1:1.6 to 1:4.55.
Thanks for taking the time to read, I will be doing this any time I see a trade present itself that I am interested in. I hope some of you found it useful. Have a great day!!
Bitnerd
