Daytrading Bitcoin – August 22nd 2020

With the recent rally above $12,000 for Bitcoin, many traders have been eyeing a move back up to the all-time highs of $20,000. While I do think this is possible within a couple of weeks/months, it is essential to note that any rally does come with retracements.

In the case of bitcoin and other altcoins, it is not unusual to see pullbacks of up to 20% and more within very short timeframes. Such are pullbacks happened the last time bitcoin reached the 20K level, and it will happen again this time. The only thing we don´t know is when. What we do know is that it usually happens when we least expect it. They also tend to occur as spikes, and that way, catching lots of traders on the wrong side. 

What we are seeing on Bitcoin right now, does not exactly follow this pattern. There is no spike here, but there is a technical setup that may indicate a possible drop in the price of bitcoin back down to around the $10,200 – $10,400 level. Without consideration to any indicators, the break of the trendline, as shown in the image below, suggests we could see bitcoin reach the level mentioned above. 

This is solely based on a break of the trendline, as shown in the image above. By applying a measured move to the break, indicates a possible target of $10,200 – 10,400. 

Will it happen? Who knows. But it is a possible setup, and with the retracement, we have seen today, this could trigger a potential trade setup with a reasonable risk: reward ratio. 

How do I intend to trade this? Luckily I got in before the break, so I am currently in a position with my stop loss at break even. I plan to keep it here and lets this trade play out throughout the weekend. I am in no hurry to close this trade, the funding rate favors short positions, and I believe in further downside. 

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