Bitcoin has continued to roll over and head south today after dropping by a total of around 4.5% to break beneath the $11,000 level and reach $10,900 - where it is currently trading. This latest price fall has now brought the total 7-day price drop up to -6.5% as Bitcoin continues this short term retracement.
The latest price fall has now caused the entire market cap for Bitcoin to drop back beneath $200 billion to reach where it currently trades at around $195.10 billion.
A few days ago I wrote my BTC prediction for August in which I had suggested that BTC has hit resistance and could rollover. Even though Bitcoin has dropped today, it was expected and the promising sign is strong support is located below where the market should rebound.
What Has Been Going On and Where Can We Rebound??
BTC/USD - MEDIUM TERM - DAILY CHART
Taking a look at the daily chart above, we can see that the resistance at the upper boundary of the triangle continued to act as strong resistance. Bitcoin had attempted to break above this level of resistance for 5 days but had failed to do so which resulted in the sharp price drop lower.
The good news is that we can see that price is approaching the rising trend support trend line which should act as support moving forward - at which point we should expect a rebound. This level of support should come in around the $10,315 region where lies the .5 Fibonacci Retracement level (drawn in green). This combined area of support should be significant enough to allow the market to bounce higher again.
BTC/USD - SHORT TERM - 4HR CHART
Looking at the 4HR chart above, we can see that Bitcoin has found short term support at the .5 Fibonacci Retracement level (drawn in red) priced at $10,683.83. If the sellers continue to push the market further beneath this level we can expect immediate support toward the downside to be located at the short term downside 1.272 and 1.414 Fibonacci Extension levels (drawn in purple) priced at $10,747 and $10,662, respectively.
If the sellers continue to drive the market further beneath this, more support is then to be expected at the short term .618 Fibonacci Retracement level (drawn in red) priced at $10,582. Strong support following this is then located at the aforementioned $10,315 support level and the long term rising support trend line (on the daily).
If the sellers prove to overwhelm the market and push the market further beneath the rising support line I expect support to be located at $10,052, $10,000 and $9,679 - but let’s pray we do not end up anywhere near there :)
Taking everything into consideration, I believe that this will prove to become a healthy retracement for Bitcoin that will be short lived. I am particularly looking for Bitcoin to continue dropping at least to the $10,300 level at which point I expect some sort of rebound to occur. If price action does break beneath here, we may see Bitcoin hovering around the $10,000 for a while.