Managing Editor’s Note: Cryptocurrencies have handed traders many wins in recent years…
That’s why Larry has worked hard to trade Bitcoin using options… And our latest 100% win shows the strength of his strategy.
Yet if you want to explore crypto further, we want to put another opportunity on your radar…
Our fellow editor Jeff Brown is about to unveil a tool he’s developed to take advantage of short-term profit windows in the crypto world.
His tool hunts for profits in cryptos many of us have never heard about. But he’s been able to turn $5,000 into $6,970 in just 3 days using this method. And that’s just one example…
Even better, he’ll explain how it works at an upcoming forum he’s hosting next week on September 25.
If you’d like to learn more – and potentially take part in his next trade – be sure to check out the details here.
Then be sure to read about Bitcoin’s latest moves below…
The Federal Reserve’s new interest rate-cutting cycle is here.
As a result, investors have pushed asset prices higher over the past week. Their hope is that rate cuts spark higher prices still.
But don’t get faked out heading into a key event like a Fed meeting.
I’ve been trading for over 40 years. That includes a streak of 20 winning years in a row during my hedge fund days.
And in that time, I’ve seen just about every type of trick the market plays to draw you in.
That’s why I’m eyeing Bitcoin’s latest rally with suspicion. It’s a pattern I’ve warned you about before.
And the Bitcoin trap looks primed to spring shut once again…
A Failed Crossover
Last month, I warned you about Bitcoin’s frequent fake-out moves.
The world’s largest cryptocurrency has a history of crossing key moving averages… then failing.
Yet that can spell prime trading opportunities if you know what to look for.
You can see that in the chart below:
Since May, Bitcoin has tried to cross above the 50-day moving average (MA – blue line) on three occasions. The attempts at “A” and “B” ultimately failed.
Bitcoin crossed back below the 50-day MA, which led to a quick pullback in price.
Then another failed crossover happened at “C.”
Following that reversal, Opportunistic Trader subscribers bagged a 100% gain by buying put options in the ProShares Bitcoin Strategy ETF (BITO) that tracks Bitcoin.
Put options gain in value if the price of the underlying security declines.
And now the chart points to another opportunity in the making…
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Testing a Key Level
Stocks and cryptocurrencies like Bitcoin have rallied into the Fed’s highly anticipated meeting this week.
But it’s creating a familiar chart pattern…
Take a look at the Bitcoin chart below:
After the latest failed crossover at “C,” Bitcoin fell toward the $53,000 area and found price support at that level.
At the same time, a positive divergence developed with the Relative Strength Index (RSI), shown with the dashed trendline.
The RSI made a higher low as Bitcoin tested the $53,000 level. That sparked a rally…
But now, it could be setting up another failed crossover.
Bitcoin rallied back to the 50-day MA at “D.” There, it crossed above – and reversed lower on the same day.
The rally has brought the RSI to resistance around the 50 level (the shaded box). That means we could see price momentum weaken again.
History doesn’t necessarily have to repeat.
But given Bitcoin’s past failed crossovers, I’m watching this test of the 50-day MA carefully.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict