BTC Update Tuesday 17th December
Tuesday 17 December 2013
Hi there people,
On the various news feeds you will read that a reported decision made by the Chinese Central Bank is behind a precipitous fall in bitcoin that is going to end very badly for everyone.
In fact, what we have actually seen is a relatively low volume sell-off triggered by the market's failure to break out of consolidation to the upside.
Here's how it looks on a chart:
I left the wedge on this chart to prod your memories. You will remember us stating yesterday that if we pierced support at $835 on momentum, a fall to $750 would be a racing certainty. And this was based on the fact that historical price action and technical support were signalling where the next bank of buying was likely to be.
As you can see, we have fallen as low as $675 support, coincident with longer term rising support (shown in green) and as I write, the market is starting to rally - as you would expect.
Now, whether this rejection gathers momentum or not is too early to say, but what we can say with certainty is that the market has, today, returned to its mean. This point in price delineates the outer limit of the uptrend. If we fall through $675, $585 will quickly follow and quite possibly $450. In the meantime what was rising support will morph into a wall of resistance against which bitcoin bears can stage counter attacks to any rally moving forward.
And this is what makes right now such a powerful place to buy. Think about all those other players that have a stake in bitcoin's continued rise. They all see and recognize this point in price as a level that must be defended. If they succeed, we are going to witness a lift-off against which you will have secured an absolute bargain entry. And if they fail, you are going to find out quick, with the option of cutting your losses to the minimum possible in this volatile market.
From a trader's perspective I am bound to say that it rarely gets to look much better than this. And this doesn't mean to say that I know a Buy order here will succeed; more that if it does you will have secured a bargain within the the existing context, and if you are wrong you will know quickly and it will cost you relatively little to have taken the risk.
Rob @ BitScan
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