The retracement lower we have been looking for has arrived. This parabolic rally higher in BTC was certainly unsustainable, and needed to come to an end. Where can we look for support?
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.