Shortly before the markets closed in Europe yesterday afternoon, we published our twice-daily bitcoin price watch analysis piece. In the piece, we highlighted the action we had seen throughout the day in the bitcoin price, and suggested a couple of the key levels we would be keeping an eye on as we headed into the US afternoon and beyond. Now, action has matured overnight, and we have seen some considerable volatility in the value of bitcoin versus the US dollar. With this said, how can we use this volatility today, and where are we looking to get in and out of the markets according to our scalp strategy? Take a quick look at the chart.
As the chart shows, having initially popped up to break in term resistance yesterday evening, we saw a pretty controlled decline towards what now serves as in term support at 227.01. However, having reached this level, and over the past couple of hours, we have seen a quick advance towards the level that we are watching to the upside – 230.76 – in term resistance.
Since the current momentum looks to be with the bulls, we will initially look for a break above 230.76 (in term resistance) to validate an upside target of 234 flat. A stop loss somewhere around 229 flat would give us enough room to avoid being chopped out in the event that we get a short-term reversal and return to trade mid-range, but will also take us out of the trade if we get a longer-term and more damaging reversal in the bitcoin price.
Looking the other way, if current levels hold, we could do one of two things. The more aggressive entry is a short entry from 230 down towards in term support at 227.01, with a stop loss somewhere around 232 maintaining a positive risk reward profile. Taking it further, if we get a break below in term support, we will then look towards 223.95 longer-term.
Charts courtesy of Trading View
