Well, it's been an interesting 24 hours, right?! Who would have thought that Mt Gox would attempt to throw the entire bitcoin protocol under the bus to save their skins...
As it turned out, indeed as it always turns out, the bitcoin market absorbed this news and then bounced right back - pretty much right from where we said it might.
Let's review the situation on a chart:
To recap, in our last post we said a retest of support at $620 (BitStamp) was looking likely but that given the co-incidence of technical support between here and $550, there would be buyers. We actually went further than that and said we would be buyers at $620 (Point A), and we were.
In the event, the reaction to Mt Gox's announcement was powerful enough to carry the market as low as $520, but as we predicted the buyers were here in sufficient force to reverse the order flow and 24 hours later the market is clawing its way back above resistance at $710.
This is significant in that having failed to break out of the downside of the channel, the market will be now be targeting the other (up) side. This isn't to say that it will succeed, just that in our experience its the way crowd psychology tends to play where the markets are concerned.
In this case the far side of this channel is co-incident with significant horizontal resistance at $800 (BitStamp).
And where this is concerned, the first thing we need to see is the close of a 4 hour bar nicely above the current resistance zone of $710.
It bares saying that if we do make it up as high as $800 over the next 72 hours or so, the market will have put in a powerful interim low and this could be what we have been waiting for as the motive force to power the next up leg. Clearly there is much yet to do but it is, at the time of writing, a possibility worth filing away.
In the meantime, we hope that you mustered the stones to follow us back in to the market last night and if you didn't it isn't too late but you need to be clear that the bargain price may have gone; you have sacrificed some profit and a loss might cost you more. On the other hand, there are never any guarantees and waiting has allowed you to witness the power of this honey badger once again. In our view this is still a decent point to climb aboard but don't hang about because momentum could build quickly from here.
Over to you...
Rob @ BitScan
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