Cryptocurrencies and Forex Analysis February 5th: Bitcoin trading under $8,000
EURUSD, Daily timeframe
Bias: Pair in Uptrend
We’ve had 7 weeks straight of bullish price action in the euro against the U.S. dollar. Last week closed in positive territory as well. Currently, price is testing the immediate resistance at 1.2530. We’re in an Uptrend, so we’d be looking to place trades only in direction of the trend. We’re monitoring the following scenarios:
During this week price could break out and close above 1.2530. If this takes place, we could add more trades onto our longs. Targets above are: 1.2600, 1.2650 and 1.2700.
Price could push back and retrace from 1.2530. If a daily candle closes with bearish movement of at least 80 to 90 pips, that would show us a retracement is in place. Immediate support levels are:
1.2300 and 1.2065. These could offer levels for doing business on the long side. A mandatory element is a bullish rejection candle on the daily timeframe bouncing from one of those levels.
If we see closure below 1.2065, we’d still be in a market where the uptrend is in place but price would be making a deeper correction. This simply means we have to be more patient. Farther support levels are 1.1900 and 1.1700.
Last Friday, we had strong news from the U.S. with the number of jobs beating expectations by an increase of 16, 000 individuals employed. The news had a major impact across the board and capital started pouring in support of the U.S. dollar and outflowing from assets like gold. For the time being, this is just a retracement and we’d have to wait for a suitable entry point in order to join the still intact uptrend in the commodity.
Price has dropped 180 pips and is currently trading at the immediate 1320.00 support level. We could see further depreciation in price toward the support at 1300.00. That second level, if rejected by a bull candle formation on the daily timeframe could offer a spot to go long. If there is no signal, we should be patient and await price to develop further.
We could be in for a consolidation between the immediate resistance level at 1350.00 and the current support at 1320.00. Traders would have to have for a breakout to either side of the fence. We’re not interested in trading consolidations due to the limited profit potential there.
If the commodity drops below 1200.00 – the trend would then reverse and bias would be strongly negative. No longs.
Bias: Downtrending, 4-Hour timeframe
The virtual currency is trading with consistent bearishness around $ 7,800 level. The market is way below what used to be a support level at $ 9,500. The scenarios on our watchlist are:
In agreement with the established trend, we could be looking for short opportunities. The $9,500 level could now offer a resistance and a level to go short from. If price retests it and then a 4-hour bearish formation rejects the level that could offer an opportunity for a short trade. Ride weakness for as long as it lasts. The potential is significant all the way to its starting point from 0. Also, make sure you have a stop loss on all of your trades.
Bitcoin could get back into the range between 9,500 and 12,000. If that takes place, we’d be looking at a consolidation and price jumping back and forth from these two levels. A breakout would be required for correct positioning. We do not trade consolidations.
Only a recovery above and beyond the $13,000 would suggest bulls getting back in control. Prior to that sentiment is strictly bearish and as traders we shouldn’t argue with the market. A closure above 13,000 could lead to a retest of the peak at 19,400.
Bias: Bears, 4-Hour timeframe
Ether is leaning on the short side as well. The digital currency is trading below $850 and is steadily dropping in price. If there is strength to be expected, however, (choosing between Bitcoin and Ether), the probability for increase in price is higher for Ether based on past price action. So, what are the alternatives for trading:
Price could test the farthest support level at $600. For more conservative approach, better await a potential bullish candle to close on the daily timeframe. That would clear out the noise in the market and provide a more stable trigger. Targets above are: $740, $860, $1000, $ 1,180.
We’re interested in a breakout to the upside. Only if there is a closure for the day above the peak at $1,379 we could open long trades. It is only above that level that bias would be strong for long trades. Hold onto longs from that level above and always place a stop loss to your trades/
A drop below the support at $600 and price closing the day below that level could give us a good price action evidence that bears are aggressively pushing price down. Only short trades under that level. Targets could be in jumps and leaps in their magnitude as weakness could be more forceful than bullishness. Targets: $500, $400, $300.
Wishing you Happy and Successful Trading!
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