Bitcoin has once again hit the headlines as reports that Cornelis Jan Slomp, a prolific SilkRoad user, has plead guilty to importing controlled substances into the US and distributing 104kg of MDMA, 566,000 ecstasy pills and 4kg of cocaine, among other substances, globally from March 2012 to August 2013. At face value, the news should offer up a bearish fundamental bias, but a look at the charts suggests this may not be the case. Here’s what you need to know when trading the BTCUSD on Tuesday.
First, let’s take a quick look at action so far. The pair stayed true to yesterday’s trade plan, with support at 413.033 holding firm and initiating something of an intraday range trade opportunity as the day matured. Heading into Tuesday morning, the BTCUSD broke through range resistance at 435.143 (again a level we had set as an initial upside target in yesterday’s trade plan) and now site just ahead of its 200 period SMA at 439.700.
Current action puts in term resistance at Tuesday highs of 442.232 and in term support at 135.143, making these two levels the ones to watch. The contradictory fundamental and technical outlook suggest a risk averse strategy may play well, so look for a break, and close above, in term resistance to offer up an intraday bullish tone. Such a tone would validate April 26 highs at 455.931 as an initial upside target, and beyond that April 24 support at 471.552.
Conversely, look for a break and close below in term support to compound the fundamental bias and suggest a bearish tone as the day matures. Such a break would validate 424.328 as an initial downside target, and beyond that, strong weekly support at 413.033.
As with every trade plan, keep a close eye on price action to ensure you stay on top of your risk management. The key levels mentioned offer nice stop loss positions, with a stop above support on a downside break, and the opposite for an upside break.
To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com