How To Navigate A Bitcoin Breakout

Bitcoin has made a significant move in our favor, rallying from consolidation at the bottom of our Daily Range to our first level of Daily Supply.

Bitcoin Funding has also jumped nearly 10%, pushing funding into the 88th percentile. This indicates that this rally is being led by futures volume, and that futures traders are returning to an optimistic outlook that we saw for the majority of 2023, until the big August correction.

Currently, today's candle is in the form of a pin bar, a coveted reversal candlestick pattern, however this won't be confirmed until daily close.

October is historically a good month for Bitcoin, we've rallied in 8 of the last 10 Octobers with an average return of approximately 20%.

Bitcoin has transitioned from a strong uptrend to a range, therefore our trading strategy has to change with the state of the asset we're trading.

Price has pumped up to the midpoint of the range, and this opens up the opportunity for two trade setups.

The first setup takes advantage of the fact that Bitcoin created a Fair Value Gap (FVG) on it's way up to our current levels. That Fair Value Gap is quite wide, and stretches from $27,209 to $27,806.

There is a high probability that price will return to fill that gap before continuing it's movement up, therefore the first tactical trade idea is to look for shorting opportunities down to fill that gap.

If price is unable to hold above $28,215, which would indicate an immediate continuation of the rally, then any pushes up near that price level are good entry opportunities to short price down to $27,364 to $27,624.

The second opportunity is grabbing a long position in those target zones to take price up further. There is a large Bearish Order Block at the top of our range, stretching from approximately $29,500 - $31,800.

Looking to take profit in those zones is a high probability setup.

Be cautious looking for immediate continuation, we want to see price hold successfully above $28,200 before getting too excited.

A great way to confirm a breakout in this fashion is to use a fast Moving Average, with a length of 6-10. Go to a slightly lower time frame, the 4HR for the Daily Chart, the 1HR for the 4HR chart, and wait until that Moving Average closes above your resistance level or breakout zone.

Only when that happens should you look to enter aggressively. This is a great strategy that has saved me countless amounts of money trading fake breakouts.

Remember - patience is a key element of being a successful trader. Don't be trigger happy with your buy orders, be patient and wait for confirmation and save yourself a lot of headache.