Bitcoin hits our 8k support
Tony Sycamore September 25, 2019 5:56 AM
As noted in yesterday’s article, if we were to present a trade review of our best trade ideas for 2019, AUDNZD would feature prominently. One of our other top performers for 2019 would be Bitcoin which after this morning’s 15% fall, again warrants our attention. In our most recent update on Bitcoin from August 27th, https://www.cityindex.com.au/market-analysis/august-rains-no-help-to-bitcoin/ we wrote that while traditional safe-haven assets including gold, the Japanese Yen and the Swiss Franc had all found solid support during the volatility of August, Bitcoin had remained “curiously” unloved.
As noted in yesterday’s article, if we were to present a trade review of our best trade ideas for 2019, AUDNZD would feature prominently. One of our other top performers for 2019 would be Bitcoin which after this morning’s 15% fall, again warrants our attention.
In our most recent update on Bitcoin from August 27th, https://www.cityindex.com.au/market-analysis/august-rains-no-help-to-bitcoin/ we wrote that while traditional safe-haven assets including gold, the Japanese Yen and the Swiss Franc had all found solid support during the volatility of August, Bitcoin had remained “curiously” unloved.
The lack of movement in the Bitcoin price during August was perhaps the first real warning that something was not quite right.
Inevitably after the event, a variety of reasons are being offered as to the cause of the sell-down, including margin calls, a break of technical support and a new Bitcoin futures contract. However, one of Bitcoins inherent attractions is the opaque decentralised world in that it operates, and this means we will never know for sure what caused the drop.
Technically, the failure to break/close above trend channel resistance $12k in early August was a reason we suggested taking some profit on longs in the run-up to $12k. It was also the reason we suggested raising the trailing stop on all remaining longs to $10.7k, to ensure a profit on the long trade opened in late July at $9.7k. Since then we have remained sidelined, waiting to rebuy Bitcoin to break/close above trend channel resistance currently at ~$10.3k. Or on a dip towards the “200-day moving average near $8k.”
After reaching the 200-day moving average at $8k overnight, I would expect to see Bitcoins price stabilise in coming sessions. Assuming it does so and should a bullish daily reversal candle form that includes a daily close above the 200-day moving average it would warrant re-opening a small long position. I will then look to add to the long position on a break/close above trend channel resistance $10.3k, looking for a move to $15k. Keep in mind, that if Bitcoin fails to stabilise ~8k, the next downside level is not until trend channel support at ~6.8k.
Source Tradingview. The figures stated are as of the 25th of September 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
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.
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.