Chart Of The Day: Trump, Powell Create Potential Bitcoin Buying Opportunity

Chart Of The Day: Trump, Powell Create Potential Bitcoin Buying Opportunity

Investing.com  | Jul 15, 2019 10:01

Did Bitcoin find its footing at the key $10,000 level, turning Trump’s criticism into a buying opportunity, or will it get worse for the digital currency before it gets better? The chart is mixed. Here’s what to look at for trading opportunities.

President Donald Trump said he was “not a fan” of cryptocurrencies, stating they “are not money, and whose value is highly volatile and based on thin air.” Trump's remarks followed Fed Chief Jerome Powell's criticism of Facebook’s Libra plans.

Bitcoin plunged 10% to $10,175, after briefly falling below the $10,000 psychological level. From a technical perspective, while the uptrend since the December 2018 bottom hasn’t ended, its endurance has been questioned, while a couple of indicators suggest prices could keep falling.

BTC Daily Chart

The first positive sign for Bitcoin is enough demand to support the $10,000 price level. There have been many analysts and investors who have referenced the psychological, round number as a red line. The 50 DMA matching up with the July lows reveal the level’s importance as a supply-demand pressure point.

While the peak and trough series is still within an upward formation, it has weakened recently. July’s inability to carry the trend higher than the previous, June 25, $13,764 peak revealed demand weakness. Another problem for the trend showed up when prices fell all the way back toward the July 2, $9,745 low. To be clear, as long as this level holds, the trend is still firmly up, but investors’ caution about the proximity of that low may become a self-fulfilling prophecy, forcing the price down to form that lower trough for a new downtrend.

The RSI provided a negative divergence, falling below its July low, while prices held above theirs. Given this is a momentum based indicator, it suggests prices may follow lower.

The MACD’s short MA found resistance below the longer MA, demonstrating that current prices are weak relative to longer prices, triggering a sell order. While, as opposed to the RSI, this is a lagging indicator, it may be sending a stronger signal right now. Given that – as opposed to the RSI – this is a lagging indicator, its current weakness partly reflects the previous rally, not the current drop, making this bearish behavior all the more alarming.

Trading Strategies

Conservative traders will wait till the trend establishes a trajectory with a clear path of a peaks and troughs in the same direction.

Moderate traders may short after the price falls below the July lows and finds resistance upon a return move, with at least one long red candle engulfing a green or small candle of either color.

Aggressive traders may go long on the proximity to the July 2, $9,745 low.

Trade Sample

  • Entry: $10,245
  • Stop-Loss: $9,745
  • Risk: $500
  • Target: $11,745
  • Reward: $1,500
  • Risk-Reward Ratio: 1:3

Investing.com

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Polski Português (Portugal) Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Logout
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+