The Bitcoin/Dollar pair (BTC/USD) lost all bullishness on January 6, 2018 when it generated a lower high of $17,234.99. Things went from bad to worse for the market when it broke support of $12,000 on January 16. BTC/USD nosedived until it bottomed out at $5,920.72 on February 6.
The pair quickly rallied as soon as it found the bottom. It went as high as $11,780 on February 20 before pulling back to as low as $9,260 on February 25. With a higher low in place, it appears that the market is set to reverse its bearish trend.
Technical analysis show that Bitcoin/Dollar is creating an inverse head and shoulders reversal pattern that hinges on the breach of $11,700 resistance. To do so, it needs massive volume of 71,000 bitcoins. Those who bought the bottom of $5,920.72 are very likely to sell positions at the resistance of $11,700. The market needs the prescribed volume to increase its chance of a breakout.
The strategy is to buy the breakout at $11,700 with volume of 71,000 bitcoins. A successful breakout will launch the market to our target of $16,500. The process can take a month.
Daily Chart of Bitcoin/Dollar on Bitstamp
As of this writing, the Bitcoin/Dollar pair is trading at $10,982.55 on Bitstamp.
Summary of Strategy
Buy: Breakout at $11,700 with volume of 71,000 bitcoins.
Target: $16,500
Stop: $11,000 after breakout at $11,700.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.
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