Last Wednesday’s Bitcoin signals produced a losing long trade from the bullish bounce which took place at the support level identified at $38,799 (BITCOMP).

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Today’s BTC/USD Signals

Risk 0.50% per trade.

Trades must be entered prior to 5pm Tokyo time Tuesday.

Long Trade Ideas

• Go long after a bullish price action reversal on the H1 time frame following the next touch of $38,653, $37,633, or $36,656.

• Put the stop loss $100 below the local swing low.

• Adjust the stop loss to break even once the trade is $100 in profit by price.

• Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

Short Trade Ideas

• Go short after a bearish price action reversal on the H1 time frame following the next touch of $40,625, $41,479 or $46,595.

• Put the stop loss $100 above the local swing high.

• Adjust the stop loss to break even once the trade is $100 in profit by price.

• Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote last Wednesday that although Bitcoin was breaking to new highs, the price really needed to get established above $40k and the key resistance level above that at $42,263 before it would really be able to take off.

I was therefore ready to take a bullish bias if we had gotten two consecutive higher hourly closes today above $40,600 or if we got a bullish bounce at $38,800.

This was a great call, as although neither level was reached over the remainder of that day, the level at $40,600 was a clear pivotal point as once we got a close above it later in the week, we immediately saw a more sustained price rise.

Bulls were successfully holding Bitcoin above the key $40k level for a couple of days but we have seen a relatively major bearish reversal which now has the price trading back below $40k.

The near-term direction of Bitcoin is unclear. Although we still have a valid long-term bearish trend with the price falling over recent months, the recent recovery in price has been significant.

The best I can say today is that the support level at $38,653 looks likely to be very strong, so a long trade entry from a bullish bounce there could work at least as a short-term trade.

If the price can get established below $38,653, that will be a bearish sign.

Concerning the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.