Bitcoin 07/10: Is The Bullish Breakout Losing Momentum?

(MENAFN- Daily Forex) Crypto has enjoyed a comeback in recent weeks, with Bitcoin finally making a significant bullish breakout to new multi-month highs, and for a while it looked like we might see it really take off to the upside. However, momentum has faltered, and although this second bullish breakout remains in play, it looks a lot more questionable today than it did at the same time yesterday. Read on to find out why and what to watch for to judge the prospects of a significant move higher by Bitcoin soon.

Top Regulated Brokers1 Get Started 74% of retail CFD accounts lose money BTC/USD Technical Analysis

The daily chart shows a continuing consolidation below a key resistance level at $87,293, but the price yesterday rejected an area near it. This was the fifth failed stab up towards that level, and the fifth one that failed to even reach it, suggesting a lack of bullish conviction in the market. Even more significantly, this latest failed rise has reacted by dropping further than the aftermath of any of the previous four failures. This is a bearish sign.

Another bearish sign is that the recent price action has printed obvious fresh lower resistance at $84,508. This sits close to another level which is likely resistance just above it, at $84,975, which is also confluent with the big round number at $85,000.

EURUSD Chart by TradingView

However, bulls should not lose all hope. On a daily chart it is clear the consolidation pattern has not broken down. Drilling down, we can see that the really crucial pivotal points look like $82,000 or even $80,000 – these are important levels, and sustained breaks below either could indicate that it will be wise to forget about fresh highs in Bitcoin for at least a while.

There is a potential support level at $83,340 below.

Bitcoin Price Chart – Multiple Rejections Near $87,293My Take on BTC/USD

I am already long of Bitcoin as a trend trader, and I use a volatility-based trailing stop, but I think a daily close below $80,000 would be a good signal for anyone to get out of a long position if they are only in it for the relatively short term.

I think a daily close above $87,293, especially if near the top of the day's range within an unusually large daily candlestick, will be an exciting signal to either enter a new long trade, or add to a long position if already long.

A bullish breakout is looking somewhat less likely to happen after the past 24 hours, and it might be telling that risky assets such as tech stock indices like the NASDAQ 100 managed to break to a new high, while neither Bitcoin nor Ethereum managed to do so.

I am not interested in taking a short trade in Bitcoin above $80,000, Support & Resistance Levels

Today's BTC/USD Signals

Risk 0.50% per trade.

Trades may only be entered by 5pm Tokyo time Tuesday.

Long Trade Ideas

Go long after a bullish price action reversal on the H1 timeframe following the next touch of $83,340, $82,000, or $80,581. Place the stop loss $100 below the local swing low. Move the stop loss to break even once the trade is $100 in profit by price. Take off 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 bullish price action reversal on the H1 timeframe following the next touch of $84,508, $84,975, or $87,293. Place 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. Take off 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.

There is nothing of high importance scheduled today concerning Bitcoin. Regarding the US Dollar, there will be a release of FOMC Meeting Minutes at 7pm London time.

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