Bitcoin looks to be breaking out of the lower median line. Next key resistance level is the previous high at the X leg. Looking at the chart, we can see a clear harmonic bat pattern forming. If we are to hit the D leg zone, marked in yellow, I will be looking to enter a short position with an initial target of 11720 and secondary target of 11100.
Bat patterns are characterised by a series of Fibonacci ratio confluences in succession. While there is a bit of leeway for what can be considered a valid pattern, we generally will first an impulsive move to make up our X to A leg which we draw from a high to a low point on a bearish bat or a low to a high point on a bullish bat pattern. We then look for a fibonacci retracement of around 38.2% to 50% This is a valid bat pattern as long as it does not touch the 61.8% retracement level. We then look for a retracement of the A to B leg of the pattern to atleast 38.2% but not past the A leg. This provides us with the C point. Finally, we look for a completion point at D which is a retracement of 88.6% of the X to A. This provides us with a profitable short entry point at D leg. There are many ways to choose take profit targets but the most standard targets are a 38.2% and 61.8% retracement of the A to D point. This provides us with a good risk to reward.
Bitcoin derivatives contracts on Bitmex can be used to speculate on the price of bitcoin both up and down. Intraday trading is a way to grow your bitcoin as well as hedge your bitcoin holdings through shorts. We will be posting more technical analysis trading setups on bitcoin as well as discussing trading strategies that can be used to trade a build your bitcoin holdings. If you enjoyed the post, and wish to trade bitcoin, visit Bitmex at: https://www.bitmex.com/register/WMiUDA Bitmex allows trading with up to 100x leverage. We recommend that a leverage of no more than 5x is used when starting out with trading. Follow us for upcoming articles on cryptocurrency derivatives trading.
