Bitcoin (BTC / USD) has been in freefall since July 24, 2018 when the rebound of its dead cat broke off abruptly at a price level of $ 8,496.96. The "smart money" used the rally to download positions. Even the $ 7.400 support could not stop the skid. By 14 August, BTC was trading below $ 6,000 and the $ 4,000 sadness and depression forecasts once again dominated the conversation.
Just as short calls for the largest cryptocurrency were getting stronger, the market rallied to $ 6,628.50 on August 15, obliterating many short positions in the process. It is not easy to exchange Bitcoins, but if you look closer, you can see that there is a method for madness.
Technical analysis shows that BTC / USD is about to exit a reverse head and shoulders diagram on the hourly chart. This is the same scheme used by Bitcoin to set off an event on July 18, 2018. If you're looking for a reversal, this model should be your main candidate.
The strategy consists of buying the breakout at $ 6,600 provided the market generates a volume of 500 Bitcoin units on the hourly chart. So far, the $ 6,600 resistance is proving a tough one to break. Bitcoin needs large volumes to help push the price above the resistance.
Once BTC / USD takes $ 6,600, it can quickly rise to our goal of $ 7,400. Sell now. This could be another pump and dump rally.
The process may take less than a month.
Bitcoin / US Dollar Time Chart on Bitstamp
At the time of writing, the BTC / USD pair is trading at $ 6,351.01 on Bitstamp .
Buy: Breakout at $ 6,600 with volume of 500 BTC.
Target: $ 7,400
Stop: $ 6,500 after the breakout.
Disclaimer: the writer owns bitcoin, Ethereum and other cryptocurrencies. It holds investment positions in the currencies, but does not carry out short-term or day trading activities.
Featured image courtesy of Shutterstock.