A major transfer occurred between two external wallets on November 1. A total of 9013 Bitcoin were moved between two unknown wallets, worth $83 million.
As of now, it is unknown if this was a whale or a transfer of an exchange between wallets. However, the motivation behind this move is unknown. Previously, it has been known that such transfers precede a large upward move in one or the other direction.
Some time later, cryptocurrency trader @themooncarl along with another trader @TheCryptoDog stated that they had both opened long positions since they believe the price has hit the low for the current range.
I’m long also with a $8,975 entry 👌🏻
— The Moon (@themooncarl) November 1, 2019
However, they did not provide any additional data, such as a target price or a stop loss placement.
Is this long viable? What is the Risk:Reward ratio? Let’s analyze.
The Bitcoin price is trading inside a horizontal channel.
Once it reached the support line, it created significant bullish divergence in both the RSI and the MACD, an indication that it will move upward.
Furthermore, it is possible that the Bitcoin price is following a fractal from October, in which it broke out from a descending triangle and is currently moving upward towards the resistance line.
If so, it should continue moving upward until it reaches the resistance line and possibly break out.
Type of Long
The tweet in question states that the long was initiated at a price of $8975. This is slightly lower than the absolute low reached in the Bitfinex exchange.
However, if one were to do so, an increase to the resistance line would amount to roughly 9%. Additionally, the stop loss would likely be moved at a break-even point.
At the time of the tweet, the price was trading at $9100. So, we will analyze two longs with that entry point, keeping a stop loss at around $8950.
A target of $9800, right at the resistance line gives a Risk:Reward ratio of 4.5. On the other hand, a target of $10,400 gives a R:R ratio of 9. A breakout above the channel would be required for the second target to be reached.
To be clear, we are not advocating to initiate a long at these levels.
Rather, we are analyzing the risk:reward ratios and the likely targets and stop losses of doing so.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images courtesy of Twitter, TradingView.
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