Well, I think we can all agree that its been a pretty momentous week for bitcoin. The Chinese issue is clearly serious and as we had identified, $750 was a key technical swing point. Once we had pierced this level and failed to get back on terms with it, the fall was precipitous. As we intimated at the time, we initiated a further buy in this area which is only now coming up for air. For those of you who followed our advice and hung in there, we apologize for the sleepless nights.
Anyhow, time has passed, the market has established a meaningful low at $450 (where, incidentally, we said it would go) and for the moment, at least, we are rallying. So, let's review the situation on a chart:
You will note that on this chart we have marked off the recent swing low and, to the left, identified its historical relevance. Those keen market technicians among you will also note that we have performed a classic complex correction (ABCD pattern) within the longer-term uptrend.
For the rest of us, we need only focus on the descending resistance line (thick red line) denoting the upper limit of the correction channel and the pink square spanning horizontal resistance at $750 and $835.
We say this because while the market is currently rallying strongly, the going gets significantly tougher once we get above $750, due to the co-incidence of the technical criteria that we have identified above and on the chart.
Whether us bulls like it or not, anyone looking to liquidate bitcoin or short it, is likely to have identified this band in price to do so. And while it grieves us to say so, any of you needing to liquidate to fiat in the near term should seriously think about doing so here too, as there is likely to be a counter-reaction here.
For those of us with an investment mentality - who wouldn't relinquish our bitcoin for love nor money - this is clearly a key area to watch, because it will take the market to slice back through it to the upside, to re-establish meaningful upward momentum, even if we dip back to re-test it as resistance in the first instance.
Remember, if this all sounds a little complex it isn't. How people behave in any market is simply a reaction to what they see and remember about what happened at given price levels in the past. So if a price point stands out for us, we can be sure that it will stand out for others. When applied to a market's prevailing sentiment, we can understand that in an uptrend, buyers are likely to materialize at support and in a correction, sellers will materialize at resistance. It really is as simple as that.
Anyway, that's enough for now. Today's chart provides us with a pretty clear view of the day's 'battleground'. Whatever your sentiment, we wish you well.
Go Bitcoin!
Rob @ BitScan
No comments:
Post a Comment