Trade Recommendation: Bitcoin Gold

The Bitcoin Gold/Bitcoin pair (BTG/BTC) took out resistance of 0.0045 on November 4, 2018. The breach triggered the breakout from the inverse head and shoulders pattern on the 4-hour chart. Also, the breakout looked valid as Bitcoin Gold had a volume buzz that’s over 410% of its daily average.

The bullish price action attracted traders and investors that were observing the pair on the sidelines. This generated a strong rally to as high as 0.005479 on November 7. At that price, Bitcoin Gold showed signs of weakness. The 4H candle created a long wick on top of its body suggesting the presence of sellers. In addition, a bearish divergence was spotted on the 4H RSI.

These indicators sparked more profit-taking. To make matters worse, the November 14 crypto carnage increased the selling pressure further. As a result, Bitcoin Gold breached support of 0.0045 and dropped to as low as 0.004281 on November 14. However, even in the midst of bearish rampage, Bitcoin Gold continued to show immense strength.

Technical analysis shows that BTG/BTC has managed to reclaim support of 0.0045. With this price movement, the dump below that level appears to be a bear trap. This ignited a rally to 0.005099 today, November 19. It retraced a bit since, but this presents an opportunity.

If Bitcoin Gold wants to keep its bullish trend, it needs to preserve support 0.0045. This would confirm the bear trap and will likely propel the market to the top end of the range.

The strategy is to buy the dip as close to 0.0045 as possible. If bulls defend the support, then we can expect BTG/BTC to rally to our target of 0.0055. The process may take a month.

4-Hour Chart of Bitcoin Gold/Bitcoin on Binance

As of this writing, the Bitcoin Gold/Bitcoin pair is trading at 0.005054 on Binance.

Summary of Strategy

Buy: As close to 0.0045 as possible.

Target: 0.0055

Stop: 0.0043

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.