The next direction for Bitcoin?

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So yesterday, we initially saw quite the drop on BTCUSD. I was trading in a tight range with a POC around the 39,700 level. It dropped down to the 38,300 level within an hour, taking out the recent swing low, as pointed out in my post about bitcoin yesterday. After the drop, BTCUSD slowly started to move up, and then things started to go fast. It moved up and broke the 41,300 level, which was a critical level, also highlighted yesterday. Right now, the price is hovering around the 41,700 level.

In short, this played out as one of the scenarios I highlighted yesterday.

What is next for Bitcoin

While we did see a substantial drop in Open Interest with yesterday’s rally, I must admit I am still quite bullish. However, I am aware that with the break of the high at the 41,300 level, a lot of people have turned bullish, so I need to be cautious. While I did get in on a long yesterday around the 38,500 level, I closed it before EOD to avoid overnight funding. Now I am flat and mainly looking for two options.

Long trade: I am looking to enter a long trade on a drop in price down to around the 40,500 level. However, I do not want to see the price back around these levels for too long. Just like yesterday, a quick and sharp drop to this level would be a solid possible long in my book.

Short trade: If BTCUSD continues to drop, comes down around the 40,500 level, and stays there, I may be looking for a possible short trade. This is, however, not my preferred trade setup. Here I would be trying to get in on a trade quite late in the move.