It was consolidating sheepishly until a big red candle just appeared out of nowhere.
The bitcoin price, at the time of this writing, has dropped to around $7,000 in what seems like a carefully orchestrated dump. We cannot tell what has caused a $500 drop in the past four hours, but people are already blaming BitMEX for the FUD. The digital currency exchange today tweeted that its internal system went offline. As a result, people’s stops were not triggered during a major market move; indeed, the BitMEX customers lost big money.
We are back online. We apologize for the disruption.
— BitMEX (@BitMEXdotcom) August 4, 2018
As far as our trades are concerned, we had put two successive short positions towards $7,275-fiat and $7,135-fiat upon breaking below our previous interim support near $7,460-fiat. Nevertheless, we went quite after looking at the bear trap.
So, what is our strategy for today, as the BTC/USD dips further below? Let’s check out after discussing the technical report.
BTCUSD Technical Analysis
The BTC/USD pair is now inside a descending channel, with the pair now slipping below its 200H MA. Bearish pennants (the orange PACMAN jawlines) are already forming. The RSI and Stochastic Oscillator has also slipped inside their oversold territory, awaiting correction. The technical indicators combinedly point to a medium-term bearish bias. So, don’t be surprised if we see more red candles by the start of next week. It also gives us plenty of reason to reevaluate our positions in line with the drops expected in the near-term future.
BTCUSD Intraday Analysis
So, as we head further to the south, we are now inside a new range defined by interim support at $6,809-fiat and interim resistance at $7,135-fiat. At the same time, $7,000-fiat could be treated as a psychological support/resistance level, depending on which way the trend moves.
To begin, we’ll first wait for bitcoin to test $7,000-fiat as intermediate support. We have already entered a long position towards $7,135-fiat while expecting a knee-jerk reaction that could make us a small profit. Our stop loss for the moment lies two-pips below $7,000-fiat, so to protect us from any extended downside action.
In case we break above the resistance, we will switch to our breakout strategy. It will allow us to put a long position towards $7,275-fiat, our upside target. A stop-loss two-pips below the entry position will define our risk.
Conversely, an extended bearish momentum will have us wait for the price to test $6,809-fiat as our interim support line. If it is broken to the downside, we will put a short position towards $6,675-fiat, while eyeing the ascending trendline (depicted in orange) for any potential bounce back. That said, a stop loss only two-pips above the entry position will protect us from any unannounced bounce backs.
Click here for a real-time bitcoin price chart.
Featured Image from Shutterstock
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