Friday, 9 August 2013

BTC Update Saturday 10th August: Bitcoin Bears Currently in the Ascendence

As implied in the title of this update, while the bitcoin market remains in a state of flux, the counter-attack launched by bitcoin bulls from support at $101 has tried but failed to drive price back through previous consolidation and this sows the seeds for a deeper correction yet.

This is how it looks on a chart:

We suggested yesterday that a further retest of support at $101 would not garner the same strength of counter-reaction as it did the first time for the simple reason that the wall of limit buy orders lying in wait for price the first time have all been executed.

What we have to ask ourselves is having since rejected resistance up at $105, how many new buyers are likely to be manning the trenches down at $101 in time for a second attack, that looks sure to materialize over the weekend.

And this is key, because if sufficient new buyers do rally to the cause, bearish confidence will, again, start to diminish as support holds.

However, from what we see right now, this is a big ask and if $101 gives we need to brace ourselves for a further fall to at least $97 and next wall of horizontal and dynamic support.

Does this prediction diminish the value of bitcoin as an investment?  Absolutely not.  What we are discussing here are no more than short term swings in the market.  But, for anyone attempting to actively trade this market, or for merchants who must continually convert in and out of fiat currency, these swings can have a big impact on one's bottom line.

So, to be clear, based on what we see right now, a retest of support at $101 looks highly likely and occurring in quick succession to the last attempt, we suspect that it is unlikely to generate as strong a counter reaction as last time - which was, itself, insufficiently powerful to drive the market back through resistance.

For these reasons we are anticipating a further dip, to at least $97 and unless $101 holds, we may be here before the end of the weekend.