Chart Of The Day: Bitcoin Setting Up For A Slip
Investing.com | Oct 25, 2021 09:39AM ET
The bulls' ability on Sunday to catch Bitcoin at the $60,000 level, then push it back above $62,000, may help embolden an increase in long positions on the cryptocurrency. Indeed, many investors are now asking when the leading digital token will finally make it to $100,000.
The launch of two Bitcoin futures ETFs last week to much fanfare—the ProShares Bitcoin Strategy Fund (NYSE:BITO) and the Valkyrie Bitcoin Strategy ETF (NASDAQ:BTF)—has fueled the underlying cryptocurrency's rise. Open interest on CME Bitcoin futures has surged as well, to number 1 globally in some places in just days, leading Charles Edwards, CEO of investment firm Capriole to extrapolate that there's "massive institutional interest."
However, technicals are signaling that Bitcoin could be about to take a break from its blistering rally.
The digital token has fallen out of its rising channel and has been developing a potential small H&S top.
The MACD's short MA crossed below the long one, weakening in more recent price comparisons. Both the RSI and ROC—two momentum-based indicators but with different calculations—are bearish.
The RSI completed a small H&S ahead of the price and has been dropping within its falling channel ever since. The RSI just topped out.
To clarify, we will call it a reversal only after the price falls below the neckline. Alternatively, if the price blows out the would-be bearish pattern, it would turn bullish, propelling the cryptocurrency to new heights.
h2 Trading Strategies/h2Conservative traders should wait for the price to fall below $55K, then rally, but find resistance before risking a short position.
Moderate traders would be content with a close below $58,000 and a return move for a closer entry.
Aggressive traders could short at will, provided they accept the greater risk that is proportionate to the higher reward they seek by moving before confirmation. The more aggressive the trading strategy, the more critical money management becomes. Here's an example of a trading plan:
Trade Sample
- Entry: $63,000
- Stop-Loss: $64,000
- Risk: $1,000
- Target: $60,000
- Reward: $3,000
- Risk:Reward Ratio: 1:3
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