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Hi, everyone. Jeff Clark here with a quick update on what I think is one of the best-looking trading setups in the markets right now. I’m talking about Bitcoin.
Check out my video below, or scroll down to keep reading.
(And here’s the link I talk about in my video for you.)
Now, I know there’s a lot of folks who are very excited about the prospects for Bitcoin, and I know there’s a lot of folks who think Bitcoin is just a giant scam. I don’t care either way. For me, Bitcoin is basically a trading vehicle. I don’t care which way it moves, I just want it to move, and that’s what I use it for.
Now, you’ll recall maybe a week or so ago, I think it was June 26th, I wrote a Market Minute essay on Bitcoin, and I talked about what I thought was going to happen with it, and it seems to be playing out.
So I want to update you really quick here. So let me share what I’m looking at on the charts and tell you where I think we’re going forward from here.
All right, so this is a chart of Bitcoin.
Let me give you a quick heads-up on what it looks to me is what’s happening. Now, back on June 26th, that’s right in here, Bitcoin was trading around $61,000 a coin, and this was the second time it was testing support, so it looked to me like we needed one more little flush to the downside, which is what we got. It broke down here.
But I said in that essay, if Bitcoin was to fall below support at about $61,000, it was going to create positive divergence on these momentum indicators here at the bottom of the chart. You can see the MACD, very strong positive divergence. The RSI, very strong positive divergence. The CCI, very strong positive divergence. Given that situation, anytime you have a stock that’s making new lows or an asset that’s making new lows with positive divergence, that tells you that the momentum behind that decline is starting to wane, and there’s probably a reversal in the cards.
And so what happened is Bitcoin broke below 61,000. I was targeting on that break maybe as something as low as 57,000. Didn’t quite get there. It got down to 57,500. But you see it was there for, for several days. You had opportunities to, to jump in. So in both of my subscription services, Delta Report and Jeff Clark Trader, we entered positions into Bitcoin as it was trading down around the $58,000 level. So we took advantage of it when we bought it here, and we’ve had this nice little bounce that’s come up off of it since then.
Now, I do think Bitcoin goes higher, but the reason I like this from a trading perspective is the risk/reward setup is, is quite favorable. You know, we have, Bitcoin trading around 62,000 here on, on Sunday morning I’m recording this. You can easily buy it here and keep a stop at the recent low, because if I’m right and Bitcoin is going higher over the next several days or several weeks, then it shouldn’t come back down to this 57,500 level where it bottomed last week.
So if you were to buy it here, this is a real easy place to put your stop. It’s a very well-defined stop area. As long as Bitcoin stays above, call it 57,000, we’ve got an upside potential, and if it drops below that, you cut your losses, you get out of the trade. So if you buy it here around 62, put a stop at 57, that’s about an 8% stop loss.
On the other hand, if Bitcoin in fact does rally, then you’ve got this, this modest resistance here about the 65,000 level, which you’ll notice this is the 50-day moving average. It’s working its way down towards that. That’s an obvious resistance level, so it should pause any sort of upside rally for a little bit.
But once it can get above that, then we’re looking at a, an easy target up here. I shouldn’t say easy. We’re looking at an obvious target up here near 75. So if you bought Bitcoin here around 62, you’ve got about 13,000 of upside versus about 5,000 or so of downside. That’s almost a three-to-one reward-to-risk ratio.
I like that setup.
So for that perspective, I think Bitcoin is going higher. This looks to me like a, a bullish pattern, a bullish setup. I would take advantage of any weakness to increase exposure to Bitcoin.
And if you want to find out more about this type of trade, we actually bought call options on a Bitcoin ETF in Jeff Clark Trader last week as Bitcoin was making a bottom there. We’re up, I think, 30-35% already in just a couple of trading days, and that’s sort of an idea of the trades that we make in Jeff Clark Trader.
We take a lot of the ideas that I might share with you in Market Minute, and we actually put them into action, and we do quite well with it. So if you’re interested in finding out more about Jeff Clark Trader, about the trades that we recommend there and the ideas that we share, the strategies we share, go to the link right here and we’ll go from there.
And that’s it for today. Have a wonderful trading day, a wonderful trading week, and we’ll update you soon. Take care. Bye-bye.
Best regards and good trading,
Jeff Clark
Editor, Market Minute