Daily Bitcoin Update
The volatility bitcoin traders have been praying for finally returned overnight, with the price dropping substantially to an intraday low of 314 midway through today’s session before recovering some ground later in the day. The last time we saw such a steep fall was in early October just before the market went on a huge bull run, rising around $130 in a little over a week.
This leaves us with two distinct potential scenarios: either the market bounces back and begins another full blown rally, or the market continues to test new bottoms on its way south.
The bitcoin price opened at 330 on the 4H Bitfinex charts amid strong bearish sentiment. As the hours passed, we saw some large sell orders drive the price down into oversold territory. There were several reversal attempts along the way (the green bars on the lower bar chart) but they were overshadowed by the unstoppable bearish juggernaut which just kept crashing through. At press time, the bitcoin price has moved just above the key 320 support level and is looking for a definite bottom. Once this is found, it could open up real buying opportunities for the bulls and start another rally.
What to Expect Today?
The technical indicators don’t support a price reversal: the bitcoin price is below every SMA and the RSI is firmly in oversold territory. This indicates a strong bearish bias in the market, with 300 the next support level to be tested and from there downside risk towards the October low of 275. In a best case scenario – and one which we see as being a realistic chance of occurring - these two support levels could potentially open up fresh buying opportunities for traders and ignite a rally towards 400 in a repeat of early October.
While we think the worst case scenario of a move to 275 is possible rather than likely, if this price does get tested then we expect it to be a true bottom and think it is a great entry price for the bulls.
Conclusion (On Daily Charts)
Current Mood: Strongly Bearish
Moving Averages: Strong Sell (0 Buy 12 Sell)
Technical Indicators: Strong Sell (0 Buy 9 Sell 2 Neutral)
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