As Bitcoin (BTC) remains near its record highs, traders contemplating joining the uptrend may face a dilemma: should they enter now or wait for a more favorable pullback?
Markus Thielen, founder of RialCenter, suggests that a pullback to the former resistance-turned-support level of the May high, under $112,000, would be the ideal entry point.
“We would prefer to see Bitcoin retest its $111,673 breakout level to provide a more favorable risk/reward entry point,” Thielen stated in a note to clients on Monday.
The risk-reward ratio evaluates the potential loss of an investment against its potential profit, guiding traders in determining whether the potential gains justify the associated risks. Traders typically aim for a risk-reward ratio of at least 1:2, requiring bullish entries close to key support levels, like $111,673 for BTC.
Markets often revisit breakout points before embarking on larger bull runs, implying that a pullback to $111,673 is a possibility. Currently, BTC is trading flat at around $119,500, having increased over 1% on Sunday following reports of the U.S. achieving its largest-ever trade deal with the European Union.
But what if a significant pullback doesn’t occur? In that scenario, the best entry would be above $120,000, indicating a breakout above the trendline connecting the highs from July 14 and July 23.
“A break above the descending trendline, especially a sustained move above $120,000, could justify re-engaging with the trend, though it would require unusually tight stop-losses,” Thielen concluded.
Leave a Reply