High-Probability BTCUSD Trade Setups [3/20]

This article originally appeared on BraveNewCoin.

This analysis is contributed by Petar Zivkovski, director of operations at Whaleclub.

The technical setups posted below use simple trend detection, support and resistance, channels, pattern and candle analysis. We aim for high-probability trade setups on BTCUSD, and use very few indicators. All charts use BNC’s Bitcoin Liquid Index for maximum accuracy.

The timeframe for trades is 1 to 7 days, so we’ll use 4h candlesticks. Bitcoin is best traded as a purely speculative commodity on 4h+ timeframes, although I’ll briefly describe a shorter-term scalp setup.

Market Sentiment

This section is based on internal (anonymized) Whaleclub trading data and is published exclusively on BNC.

Current Active Long vs Short Volume Ratio: 3.5:1

Average Active Long vs Short Volume Ratio: 2.2:1

We have a 59% excess in active long volume relative to the average. The average weighted long entry price is $411.24, which is slightly lower than the current market price — this means that on average, current active longs are in the green.

Sentiment is bullish. The risk of a long squeeze is above-average due to the high long ratio, although not as high as last week — where we had a 90% long ratio excess, which resulted in a $15 sell-off (long squeeze) as predicted. If price breaks down below key $400 support, which has held strong for now, and long positions keep piling up, then we may see a broader long squeeze.

Macro Key Points

This section is an overview of news headlines or events that may affect BTCUSD.

It was a slow week for bitcoin in the media.

News developments that may affect BTCUSD:

  • Australian banks are cutting off ties with bitcoin businesses. Although the Australian bitcoin economy is relatively small, exchanges, mining, and trading firms operating in Australia are beginning to see an increase in regulatory enforcement which could set a precedent that other countries could follow.
  • 21.co launches a Ping21, a service that allows users to earn bitcoin by monitoring uptime and latency of various web services. This is similar to Pingdom, which monitors web service availability from multiple origins globally — except Ping21 is run exclusively with Bitcoin.
  • Network fragility, block filling, block size debate, and core developer disagreement headlines have toned down this week.
  • Reminder: The bitcoin block reward halving is estimated to occur on July 10, 2016 — that’s less than four months from now. The extrapolated post-halving bitcoin price, based on current market price and assuming demand for bitcoin remains the same, is about $200 — which is surely an attractive entry price point to many market players.

Technical Analysis

4h+ Timeframe Setup

Let’s start by determining key support and resistance levels on a higher (daily) timeframe. We find that price has consolidated between daily support area around $405 and daily resistance area around $420.

As for trend lines, our squeezers from last week are still valid. We have both supporting and resisting levels in a triangle formation converging around the $430 level, with current lows at $400 and highs at $450.

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