Trading Bitcoin: Neutrality Prevails, Price Can Go Anywhere

Neutrality Prevails

On the daily chart above, Bitcoin was perfectly rejected by the 200MA (orange). Bitcoin’s sequential indicator reached a green 2 yesterday. In sequential theory, a green 2 closing above a green 1 is a signal to place a long trade. However, this hypothetical long trade wouldn’t have much room to the upside considering the 200MA (orange) is at $8.6k. Now, Bitcoin is on a green 3 of 9 candle and in neutral territory. We aren’t certain which direction price will head next. What we do know is that the 200MA (orange) will be an important battle between the bulls and the bears.

4 Hour

The 4 hour chart above is providing severely bearish signals. Furthermore, the 4 hour chart may be foreshadowing what’s next to come. The sequential indicator is currently on a red 2 on the 4 hour timeframe. As you can see above, Bitcoin was perfectly rejected by the 128MA (green) and is now testing downward. In sequential theory, a red 2 closing below a red 1 is an indication to place a short trade. If you were basing your trading solely on sequential theory you would place a short trade. However, we prefer to look for confluence across multiple indicators before placing a trade. For example, sequential is telling us Bitcoin is bearish on the 4 hour timeframe. That being said, the Lucid SAR (blue x’s) is still below price and is acting as a bullish support level. Before placing a short trade, ideally we’d to see the Lucid SAR flip into a bearish position above price. Overall, sequential is bearish on the 4 hour time frame, and price action is relatively neutral.

News

Bitwise ETF has recently been denied. While many in the crypto space are hopeful for an ETF approval, the chances of a pending approval seem highly unlikely. As you can see from the recent price action, the market was virtually unaffected by the denial of the proposal.

Conclusion

Price action remains neutral as the bulls and bears battle over the 200MA (orange). In yesterday’s article we noted that the channel between $8k and $8.5k should be considered a no-trade zone. Price still has to make a decision in one way or another. Ultimately, we are watching closely for a definite move.

Disclaimer: The author of the article owns Bitcoin.