Dump Down to Mid 5000's for Bounce
Bitcoin / Dollar BITFINEX:BTCUSD
Well at least we've got some volume now. The trend line of support that I talked about in my last post was an extremely important level. Although we got the bounce off of it that I was looking for around the 7000 level, it paled in comparison to the momentum that we got from it in early February and April. 7700 down to 6100 in just a few days sounds pretty rough, but having broken through that trend line we are now under very heavy pressure from the bears and I would not feel confident expecting 6k to hold as strong support.
In short, using the same logarithmic scale as before, I'm expecting BTC to continue this downtrend through the 6k level and then bounce up around the 5500 area. An important level to watch is the downtrend line that plagued us until we broke out of it on 4/20, this is should act as a key level to bounce off of as it's one people will definitely be watching. The next upward trend line that can be drawn below the one we just broke through intersects with this downtrend line right around 5500, where if you look to the left at the circled area, this is a level that we've seen multiple bounces off of.
Like I said in my last post, it's impossible to say if this is the level that we'll reverse at (and there's no way to know how big money will next manipulate the market), but it's a level I'm confident will result in a bounce. Charts don't simply go down forever, the RSI is wildy oversold, and if we break down through the 6k level quickly, I would be shocked if there wasn't some buy side liquidity at this level.
---Now for a longer term idea---
I'm expecting a bounce off of this level, but I doubt that it will be strong enough to reverse this market that the bears have such control over now. Looking at the zones formed by the trendlines on the chart, I'd expect choppy, sideways trading to occur in the our current zone as we bounce off of 5500 and retest the mid 6,000's and possibly the upper trend line (though I doubt we break above this and the low 7,000's anytime soon) before we have yet another rapid dump into the lower zone outlined where we will eventually have a good shot at a bottom in the mid-high 4,000's. Also important to remember that mining costs in the US and Russia are right around this price level, so it would be tough to break through them (even though China mines for mid 3,000's and mines the most). Thanks for reading and pray for ETF's!