I also mentioned that the drop to $6,500 range would be rapid if we broke support.
It appears the bulls have lost and support has been broken, so where do we bounce and ultimately land on this drive down?
Overview & Analysis
Daily above shows support at $6,612 on . We currently sit at BITSTAMP:BTCUSD
We will have several small bounces that will create overbought & oversold conditions as we drop rapidly and the market attempts to call the bottom. This will open up good opportunities for the scalp traders out here. At this point a drop into the support at $6,600 appears inevitable unless some serious buy support comes in that is not easily visible.
6 Hour Bitstamp
On the 6 hour above we show heavy sell pressure on the but also a 9 on the Tom sequential signaling a reversal point in the drop. The may not apply here as support is broken and no single indicator is a god indicator. However also in favor of a small bounce here before dropping further is the and the .
2 Hour Bitstamp
Further supporting an oversold opportunity and a potential bounce here is a slightly divergence. The indicator below however is in extreme danger, so play this bounce carefully.
Based on the data in front of me I see a potential slight bounce upward before continuing down to above mentioned support targets as of this writing. The risk reward is too great on the risk side to try and open up any kind of positions. However the risk reward on a low leverage short is in my parameters. Considering support was broken I do not expect anything dramatic out of the oversold conditions, the market will attempt to pull it back up into support but at this time there is nothing indicating that we will and hold. Also to be clear I am not calling $6,612 as the bottom, I am simply publishing the next major support. I will update this with more detail at a later time.
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The last time we went parabolic, the 5-month SMA crossed below the 10-month SMA and in hindsight, that signaled the onset of the capitulation phase. I believe we are about to enter that phase now, as the cross is about to occur again.
I agree that short is the play here.