So, as we intimated in our last post, the ongoing bitcoin sell-off has accelerated as successive technical support zones were pierced.
Let's look at it on a chart:
What we see before us is a perfect illustration of what happens when a market tries but fails to break out of an established trend channel; basically, it steams back in the other direction to re-test the other side of that channel.
Further, in this particular case we have already pierced channel support on the far side once and the market still looks weak. If this weakness carries into the European open we are likely to retest the low of the day again and if it gives the market will trade back down to $835 (Gox) before you can say knife. What happens after that is less certain as support will be strong here. Depending on what we see in terms of rejection this may prove a reasonable BUY point. Stay tuned on this one.
Having said this it isn't conceivable that support builds from where we currently stand and if we manage to rally and hold back above our neighborhood inflection point (@ arond $920 Gox) bears will start to close out their shorts and more and more bulls will climb back aboard.
However, in the meantime, we need to be wary of an accelerating sell-off. This is not the moment to be buying on limit orders; don't try and catch the falling knife...
Rob @ BitScan