Bitcoin Breached Resistance – Should I Long?
Bitcoin has been trading in a range since May 11th until Yesterday May 27th. The range low was at 25,800 USD and the Range High was at around 27,700 USD. Yesterday, May 27th, During the NY session, Bitcoin broke through the range high.
The question we have to face is now, what do we do? Should we go long or short?
IMO, the answer for now is to wait until the NY session for more clarity and these are my reasons:
1. Although Bitcoin broke through the range high during the NY session hours, the Asian session countered the move, there is no continuation to the upside. IMO, Asian traders are savvy. If this was a new uptrend they would buy.
2. The RSI on the lower timeframes is too high. The 4H RSI is at 73. The 1H RSI cooled off a bit to 63.79. I think that to support a next leg up bitcoin needs to consolidate a bit more.
3. The 27,700 level, the previous range high has not been tested as support.
4. Yesterday’s leg up filled the wick of May 10th but did not move substantially above that level.
5. The daily RSI shows a hidden bearish divergence. Meaning that the price made a LH while the momentum indicator did a HH.
6. The leg up left an imbalance on the chart. Experience shows that every green candle has to be balanced by a red candle or a wick.
What do we need to see to go long?
1. A successful retest of the range high as support.
2. A wick or candle that balance some of the May 28th green candle.
3. RSI on the lower timeframes cooling off.
4. A convincing move, with volume above 28,300. Granted, you may not want to wait for 28,300 to go long, I won’t, but the three previous conditions are a must IMO.
Possible Long Scenario:
1. Wait for the imbalance to be resolved on the lower timeframes.
2. Look for a convincing rejection of lower prices with volume.
3. Go long when price moves up.
Possible Trade Setup:
These are just possibilities none of us know what the NY session will bring. Consider this as contingency plans.
Plan 1:
Entry: 26,900.
SL: 26,600.
Targets:
TP1: 28,300.
TP2: 29,400
TP3: 30,500
Plan 2:
Entry: 27,700
SL: 27,460
Targets: Same as Plan 1
Plan 3:
Price breaks down completely. I will look for a long at the range low.
NFA
Feedback will be appreciated
Best wishes to all
The question we have to face is now, what do we do? Should we go long or short?
IMO, the answer for now is to wait until the NY session for more clarity and these are my reasons:
1. Although Bitcoin broke through the range high during the NY session hours, the Asian session countered the move, there is no continuation to the upside. IMO, Asian traders are savvy. If this was a new uptrend they would buy.
2. The RSI on the lower timeframes is too high. The 4H RSI is at 73. The 1H RSI cooled off a bit to 63.79. I think that to support a next leg up bitcoin needs to consolidate a bit more.
3. The 27,700 level, the previous range high has not been tested as support.
4. Yesterday’s leg up filled the wick of May 10th but did not move substantially above that level.
5. The daily RSI shows a hidden bearish divergence. Meaning that the price made a LH while the momentum indicator did a HH.
6. The leg up left an imbalance on the chart. Experience shows that every green candle has to be balanced by a red candle or a wick.
What do we need to see to go long?
1. A successful retest of the range high as support.
2. A wick or candle that balance some of the May 28th green candle.
3. RSI on the lower timeframes cooling off.
4. A convincing move, with volume above 28,300. Granted, you may not want to wait for 28,300 to go long, I won’t, but the three previous conditions are a must IMO.
Possible Long Scenario:
1. Wait for the imbalance to be resolved on the lower timeframes.
2. Look for a convincing rejection of lower prices with volume.
3. Go long when price moves up.
Possible Trade Setup:
These are just possibilities none of us know what the NY session will bring. Consider this as contingency plans.
Plan 1:
Entry: 26,900.
SL: 26,600.
Targets:
TP1: 28,300.
TP2: 29,400
TP3: 30,500
Plan 2:
Entry: 27,700
SL: 27,460
Targets: Same as Plan 1
Plan 3:
Price breaks down completely. I will look for a long at the range low.
NFA
Feedback will be appreciated
Best wishes to all
Order cancelled:
Bitcoin dumped harder than I expected. I longed 26,600 but I got stopped out overnight. I moved the SL to entry and my stop got hunted. that's life. let's see what the future brings
