Because of the velocity of the move higher, and the ease at which BTC sliced through resistance, it is hard to get a sense of where support will form. $10,000, because it’s a round number, seems to be holding so far, but in reality, firm support should form above the $8,700 area, where this massive rally seemed to launch off from. If we really collapse through that support, one can point to the $5,000-$6,000 area, where grind higher began back in early May.
On May 17th, we wrote: “Our retracement target of $8700 has not been breached and remains the level to watch in the near term. The next target being 66% retracement to high $13,000’s.”
On June 17th, we wrote “We are still on this tremendous tear, and it feels like BTC wants nothing more than to get back to $10,000. We do not wish to fight this force. The old adage “the trend is your friend” tells us to ride the wave for however long you can before getting off safely.”
A long BTC trade initiated from this June piece would have done extremely well to exit at our $13,000’s price target. If this exit was missed due to the sheer whippy-ness of the markets, it would seem ill-advised to hold for a second attempt at that near term high. It seems more likely than not that the lower prices are now in the gun-sights of this market. As we moved higher, the “trend was your friend”, but this retracement lower is a sign that there is simply more selling then buying at these prices. Only time will tell.