Trade Recommendation: Bitcoin Gold

Bitcoin Gold (BTG/USD) has been on our radar ever since it breached our range midpoint of $12.85 on January 10, 2019. At that point, we were fairly certain that the market will head to our range low of $9.10. Bitcoin Gold’s inability to stay above $12.85 was a clear signal that the market is still in accumulation mode. This may be bad news to participants who were playing for the breakout. However, this is likely a golden opportunity for bottom-pickers.

Technical analysis shows that BTG/USD is currently trading inside a descending channel on the daily chart. This suggests that the market is bearish in the short-term. However, the price of Bitcoin Gold has been driven down close to our support of $9.10. This is likely to spark the interest of bottom-pickers and bargain hunters. Our technical indicators are supporting this view.

First, volume on January 28, 2019 surged significantly as the market dropped below our support of $9.10. This tells us that bears tried to take out the support but bulls were able to hold their ground. As a result, the market printed a candle with a long wick below its body to indicate the rejection of lower prices.

In addition, we can see the daily RSI generate a large bullish divergence. This is a reliable signal that a reversal is on the horizon. Lastly, the market is currently trading in oversold territory. The selling relief combined with the expected demand increase at $9.10 will likely enable Bitcoin Gold to break out of the descending channel.

The strategy is to buy as close to $9.10 as possible. As long as BTG/USD trades above this level, it will likely rally to our range midpoint of $12.85. Take that out and the next target is $16.50.

The process may take less than a month.

Daily Chart of Bitcoin Gold/US Dollar on Bitfinex

As of this writing, the Bitcoin Gold/US Dollar pair is trading at $9.72 on Bitfinex.

Summary of Strategy

Buy: As close to $9.10 as possible.

Targets: $12.85 and 16.50.

Stop: $8.80

 

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.