Bitcoin Bounce Over

The Setup

Firstly, in my previous article, I articulated that Bitcoin (BTC) futures should have rallied towards the 4,500 price level.  However, the counter-trend rally stalled around the 4,400 price level.  Now, the overall downward trend is re-enforced.  This is corroborated by BTC crossing below its moving average on a 4-hour time frame.  Hence, this is a selling opportunity for BTC.  Exhibit 1 illustrates the price movements of BTC on a 4-hour chart.

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Exhibit 1 – BTC 4-Hour Chart

Source: Bloomberg

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The Reward

Moreover, the reward entails BTC declining 11.82% from current levels towards the 3,500 price level.

The Risk

However, there is a probability that the cryptocurrency can reverse and head higher.   To mitigate this risk, investors can place stops 5.90% above current price levels.

The Opportunity

Finally, this selling opportunity results in a 11.82% potential gain, risking 5.90%, a 2.00 risk-reward ratio.

 

The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

I am a Senior Portfolio Manager of the leading Mutual Fund company in the English-speaking Caribbean that has an AUM of approximately US$3Bn. The portfolios I manage comprise mainly traditional asset classes, however, I also trade alternative assets, particularly stock index, forex (including bitcoin) and commodity CFDs. A couple highlights in my career has been launching the 1st tradeable index fund in the Caribbean and a dissertation on US Sector Rotation. I have been a Chartered Market Technician since 2014, one of two in the English-Speaking Caribbean and I am a recent graduate from Cass Business School.
TA qualifications: Chartered Market Technician

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