Here goes...
As you can see from this chart, Bitcoin is again probing the green rising support line (shown in green). On the face of it this would appear an excellent moment to buy into or add onto a long position - representing as it does, a 'wholesale' price within the existing context.
However, we cannot help feeling that if this market were intent on reversing up from this point in price, it would have done so by now. And as you can see, what reaction there has been has been driven by very modest volume.
On this basis, our thesis is that after such a long and sustained rally, we need to be ready to absorb a deeper reaction still as this is the higher probability event. We would see this further dip driven by a move below support at $130, which triggers stops and fuels a further sell-off, down to somewhere around $125. Now at this point we can be sure there will be a buy wall in position. Whether that wall is strong enough to reverse the order flow we cannot know but if it is, this is where - in our opinion - the bargain long entry is to be had.
Now, it merits emphasizing that we have no more idea than you if this scenario will unfold exactly as we have described it, but thinking this way will at least keep us out of a buy trade at market that - in the overall context of the rally is very near the peak - and put us in the right frame of mind to capture a potential bargain on the back of a more pronounced counter-trend move that will scare many.
If we are wrong and the market does rally from here, it will only have cost us a further buy opportunity and since we are already long, we can live with that.
Whatever, the next 24-48 hours promise to be more interesting than the last week. It's time to buckle up for the next ride.
Happy Trading!
Rob @ BitScan
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