BTC Update Thursday 4 July

After a weak rally yesterday, Bitcoin well and truly fell out of bed, crashing through long term rising support (the diagonal red line).

Here's how the chart now looks...

The impact this sell-off has on sentiment is going to depend heavily on what happens over the next 24 hours.  If, on one hand, we recover everything that has been lost, bitcoin bulls will breathe a huge sigh of relief, $72 will be seen as a climactic low and the chances build of a significant upside reversal.

If, on the other, we cannot achieve a bounce of the significance required, the sell of could well accelerate further.

Let's now home in and take a closer look at the key levels moving forward...

As can be seen here, a bank of limit buy orders sitting in the support band between $74 and $79 has been sufficient to stem losses for the time being.  

While this level holds the first target for bulls is around $85, but even if we get there the confluence of technical resistance between here and $100 is truly formidable as the fearful will be looking for any opportunity to liquidate their bitcoin holdings at the best price they think the market is now capable of offering.  As a result the market could easily reverse again even if it can claw its way up to $95.

And if $70 gives there isn't much in the way of support until we hit the 50s.  Gulp...

However, having said all this, the most powerful counter-moves are always triggered from extremes.  The fundamental reasons for getting into bitcoin haven't changed over the last week and big players will have been waiting for this event to feed their orders into a notoriously illiquid market.

So, if you can muster the courage to grasp this falling knife, you may yet look back on the 4th of July with a grin.  Fortune, as they say, favors the brave.