August rains no help to Bitcoin

With my recent break on the beautiful Indonesian island of Nusa Lembongan at an end, it’s good to see that Sydney has received some much-needed August rain over its major dam’s catchment area as have some other areas of the drought-stricken state.

With my recent break on the beautiful Indonesian island of Nusa Lembongan at an end, it’s good to see that Sydney has received some much-needed August rain over its major dam’s catchment area as have some other areas of the drought-stricken state.

I also note that August has once again lived up to its reputation for delivering heightened volatility in markets. Key stock indices in the U.S. and here in Australia remain approximately 5% below recent highs, despite yesterday’s extraordinary reversal higher.

Yesterday’s turnaround sparked by claims from President Trump that representatives from China had called twice to restart trade talks - a relief that the two countries moved quickly to defuse tensions after Friday’s flair up.

However, the events of recent days also highlight that the leadership in both countries remain deeply divided between a desire to dig in and play trade war “hardball”, or to relent and end the dispute which has outlasted all expectations. All before the start of another historically volatile month, September.

Curiously while traditional safe havens such as gold, the Japanese yen and Swiss Franc have all found support during the volatility of August, the same cannot be said for Bitcoin.

The failure to break/close above trend channel resistance $12k in early August was a concern and a reason we suggested taking some profit on longs on the run-up to $12k. It was also the reason we suggested raising the stop loss on remaining longs to $10.7k, to ensure a profit on the trade opened at $9.7k. https://www.cityindex.com.au/market-analysis/a-forest-though-the-trees-bitcoin/

With the profit stop loss at $10.7k subsequently being triggered, I am currently square Bitcoin. I am waiting for a pullback to rebuy Bitcoin towards trend channel support and the 200-day moving average near $8k. Alternatively, should the pullback to $8k fail to eventuate, I will also consider buying a break/close in Bitcoin above trend channel resistance $11.5k.

In summary, in the medium term, I still favour the view that Bitcoin will trade higher towards $15k /17k. However, in the short term the failure to rally during the August rains when other safe have assets did, suggests lower prices may come first.

August rains no help to Bitcoin

Source Tradingview. The figures stated are as of the 26th of August 2019. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Disclaimer

TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)

Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.

Any advice provided is general advice only. It is important to note that:

  • The advice has been prepared without taking into account the client’s objectives, financial situation or needs.
  • The client should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before following the advice.
  • If the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the PDS for that product before making any decision.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.