BTC Update 9 March

Monday 10 March 2014

G'day!  In our last post, following bitcoin's bump up to retest support at $710, we cautioned to expect a pull-back to at least $640 (BitStamp). In the event this happened almost immediately but after an intial rejection the market drifted sideways and at the back-end of the week, probed a little lower still.

BitScan BTC Market Analysis 9 March 2014

However, from the chart you can see that support has been found, for the time being, against the base of a rising channel (thick green diagonal) and the market is trading right back at $640 (shown in orange) which looks more and more like a critical pivot point.

The first observation we would make is that sellers have NOT come flying back in against $640, tested as resistance.  This is a bullish indicator and it represents an opportunity for bitcoin buyers to take the initiative; bitcoin bulls can enter or increase their exposure at what may turn out to be a 'wholesale' price within the context of what may well be a nascent rally.

Having said this, should the market stagnate at $640 for too long, momentum will quickly shift back to the downside. Should this occur, rising support will get re-tested and it may not hold at the second time of asking, so rapidly on the heels of the first.

So, how should this development be played? 

Well, for active traders, $640 represents a rational point in price to BUY, so long as one keeps a loss stop relatively tight - like below rising support.  For investors it also represents a rationale opportunity, noting that the market could easily fall back to retest $450 without telling us anything new about overall market sentiment.

And that's all we have for now.  To summarize, we just might be starting to see the early signs of a nascent trend reversal.  As ever, these situations are exactly what we are looking for as they offer the possibility of getting an early foothold at what might turn out to be the very beginning of the next move.  However, anyone taking this early bait must accept the fact that the earliest signals have the highest probability of turning into 'false flags' and prepare themselves to cut losses early if this turns out to be the case.

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