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BTC Ready for a Short-term Rally

By:
Joseph M. Wagner II
Published: Mar 21, 2022, 22:44 GMT+00:00

Bitcoin is showing signs that a rally is imminent, at least in the short term.

BTC Ready for a Short-term Rally

Entering a long position from $40,700 – $41,000 is advised. We base this sentiment on Bitcoin’s successful bounce off of the short-term 38% Fibonacci retracement level, which coincides with the 50-day moving average. This area also coincides with the upper band of a compression triangle that BTC broke above last week. All these three confluent indicators point to the bounce higher following the successful holding of this technical trifecta as important and bullish.

Bitcoin daily chart

The short-term retracement we are using spans from the lows at $32,962 up to the highs at $45,520. We can see that last Monday, March 14th; we had a bounce higher from the 61.8% Fib. level that took us just shy of the 23% retracement level ($42,556). This successful defense by the bears could have marked the end of last week’s short-term bounce, but after a successful bounce off of the area mentioned in the first paragraph, it looks as though we may trend higher still.

Bitcoin 4 hour chart

As of 3:30 PM EDT, Bitcoin is trading around $41,000 on the spot exchanges and a few dollars lower in futures on the CME’s front running month. Traders who wish to take our call should have ample opportunity to enter from the long side on a pullback to $40,800 – $40,900. Place protective stops at $40,300 and target $42,500 for an exit. This trade is a short-term play that will likely play out within the next trading day(s).

One option for longer-term exposure would be only to sell half of your initial position at our target should it get there without stopping us out, and holding on to the other half of the long position if Bitcoin appears to be set for a break above its current trading range and see how BTC reacts at the 61.8% retracement of our longer data set at roughly $44,500.

This strategy would equate to a riskier but more lucrative exit strategy. Again, I would advise at least pulling some profits at our shorter-term target, if not your entire position depending on your specific risk tolerance.

Bitcoin 1 hour chart, trade highlighted

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About the Author

Joseph m. Wagner II has been studying technical analysis for eight years. He is a producer and video editor at thegoldforecast.com. His primary focus has recently been bitcoin and cryptocurrencies. He writes a daily blog for the gold forecast titled “Bbitcoin Fundamentals.”

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