The bitcoin price fell sharply today but holds above $700 support. Sell-offs will happen and we look for support levels that will provide support for building the next wave of advance.
Time of analysis: 15h00 UTC
From the analysis pages of xbt.social, earlier today:
A sizeable $70 drop in the Bitstamp chart, today, as speculators took profit for various reasons: end-of-week, futures settlement, technical signals or just plain caution.
Bitcoin price has covered just over $200 and 1,300 CNY during the past week – a large distance and encouraging advance.
It is unclear how deep the current pullback will decline. Price is well above support at $680 but is some distance away from its 1-hour 200MA (red) that periodically demands contact. The price pattern here at the wave top certainly looks ominous, but is missing the parabolic blow-out that characterizes a bitcoin rally termination.
It may be that the scenario communicated in yesterday’s analysis summary unfolds: this may only be a subwave of a larger set of waves unfolding in the 2016 rally. Many speculators now find themselves in profit for the first time in two years and the fear, no matter how irrational, of their positions going back underwater, must be prompting nervous impulses to take profit and buy on the next dip.
xbt.social traders saw a signal to close long positions in the $750s and now await the next signal to action. Whether it be long or short will be based on chart technicals and not on predictions or hopes for a specific direction.
A gradual series of advances and contractions would be far more sustainable and tradeable than a stupendous blow-out to a new all-time high that will inevitably sell-off in a vertical freefall.
Bitcoin price corrects from the high $700s and 5000 CNY. There is reason to suspect a correction prior to another push to the upside. At this stage we need to see how the market negotiates the important levels at $700 and $680. The 1hr 200MA is currently rising to these levels and may bolster support over the weekend.
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Last modified (UTC): June 17, 2016 18:37