It has been a rough couple days for cryptocurrency traders as the market took a steep dive after hitting all time highs only three days ago. Both Bitcoin’s and Ethereum’s price toppled over 15% causing investors to panic. However, after showing strong support at the bottom it looks like the markets are recovering. Will the price climb back up the wall of worry, or will cryptocurrencies shed more blood? To recap, the catalyst for the first crash is believed to be Okcoin liquidating its long positions. This caused many traders to get margin called ultimately netting a loss. The market had a hard time recovering because many decided to cut their losses as they were already in profit after Bitcoin’s meteoric rise in the past month. A few days later Bitmain released their blog post which mentioned a contingency plan for the August 1st UASF soft fork. The blog post essentially stated that on August 1st Bitmain will fork Bitcoin, the news didn’t sit well with investors at all and contributed to the second price fall.Looking at the above chart, we can also see massive trading volume right around the dip at the $2100-$2300 level. That means that the support at those levels is quite strong as there are many investors who are still looking to get in on the Bitcoin hype. Looking on tradingview we can see that quite a few users are signalling that it is currently a good time to buy. For example, DLavrov who successfully called the latest Bitcoin short as mentioned in out previous technical analysis article, suggests that:
The market dropped to the uptrend line. We can see price reversal confirmed by local swing low – it’s 2100.00 level. Profit target should be at 2900.00 level or we can use trailing stop for exit.You can check out his chart below: . It’s long opportunity and we should think about placing buy-stop pending orders. Entry level for long trades can be above 2400.00 with stop below the
Dmitry suggests heavy use of trailing stops if you are unsure of upward direction. A trailing stop is an order to buy or sell if the market moves in an unfavorable direction. In other words it is an order meant to cut your losses. If you are willing to risk a long position but are unsure if the market will continue its climb, you can place a sell order if the price falls past a certain threshold. For example, if you are willing to buy in at $2350 with the goal of selling at $2600, but are scared Bitcoin will drop under $2000, you could place a trailing stop sell order at $2200. This way, you can cut your losses while the price is reasonable, instead of facing the risk of a further price crash from which your portfolio would struggle to recover. The orders can work the other way as well, if you sold Bitcoin at $2400 but are scared of missing another bubble, you can place a buy order at $2500 in case the price starts rising rapidly. This is a much more risky way of trading but if you are playing with realized gains that might be the way to go. Keep in mind, not all exchanges support trailing stops so make sure you check if there is an option for such orders. Otherwise, if you place a sell order for a really low price, it will execute automatically causing unwanted results.
Bitcoin Buy Signal – BTCUSD TradingView https://t.co/h721lUGwks #Bitcoin #Trading #Investing— Dmitriy Lavrov (@LavrovFx) June 15, 2017