In our last post we identified the market as trading at key support. Much further South and the sell-off would accelerate BUT if support held, buyers might once again re-enter the fray, providing the motive force for the next rally.
While the market hasn't moved a great deal in price terms, over the last 24 hours, the support zone we identified is continuing to hold. Let's have a look at it on a chart:
While trading volume is down and the candles look decidedly non-committal, the market has - nevertheless - managed to claw its way back above the inflection point at $920 and is currently probing resistance at $960.
Given the bearish assault that support has withstood over the last 24 hours this is, in our view, a pretty bullish indicator and while it is possible that a renewed sell-off in Europe, and the US after it, finally drives the market decisively through $900, the longer this indecision endures, the more chance there is that the buyers will re-assert themselves.
For this reason, and given the market's relative proximity to support, we see this as a sensible zone to enter the market long or add on to an existing position - for active traders. Put another way, we starting to consider the recent sell-off as a normal correction, rather than the pre-cursor to a reversal in overarching sentiment.
As such, it represents an opportunity to enter this market long at a relative discount within the existing bullish context.
Having said this, a further plunge to below $835 would force us to re-consider this bias so if you fancy taking a punt here, you need to watch the market's subsequent movement carefully with your finger on the sell trigger should it become necessary to cut your loss.
For the time being, though, the knife's fall appears to have been arrested. Accordingly, it presents the brave with an opportunity to pick up bitcoin at a wholesale price.
We'll be in touch again as the situation develops.
Rob @ BitScan