Howdy! So far, everything seems to be going according to plan. The only real question is, "Are we done rallying upward (for now)?"
As you can see, we already broke through the 7350 resistance level I spoke of earlier, and are now testing the 7450-7500 resistance area above.
Currently, we are also a bit overextend and entering overbought territory on our daily chart. On the other hand, the 48HR chart still looks very bullish.
Keep in mind, 7500 is a very major level of resistance both psychologically and technically, and will not break down very easily.
That said, the current top is 7440 on BITMEX with massive overhead resistance. You can expect many Bears/shorts will be pounding the market at this level with hopes to swing the price downward toward their coveted 5k level. (However, I am not entirely convinced that target will be hit without another major ETF rejection.)
With S. Korea once again entering the market after a ~9-month hiatus, I expect a continued rise in volume. This added volume may very well make it very difficult to drive prices below 6k (although, not impossible).
Here are a couple scenarios:
1. If we break above 7.5k (and that's a big if), there is not much overhead resistance until 7.8-8k. This would be a nice short-squeeze rally and would almost be a perfect level to enter short, since the resistance is clearly defined at this level, and we will need to 'exhale' a bit for long-term health and stability (IMO).
2. If we fail to break above 7.5k, however, there is a good chance we start our descent for our well-needed retracement -- creating a lower high in the process.
From the current 7440-7500 region, the golden retracement level would be roughly at 6.5k (give or take $50). However, if we only retrace back 6.8-7k, there is a very strong chance (IMO) we will attempt to rally back up to test 8k -- leading up to the formation of cup & handle pattern, which should be clearly visible on the daily.
**Either way, I feel 8k will be tested sometime as we remain above 6k. On the other hand, I do not expect a move under 6k anytime soon (simply because everyone expects this happen right away).
Lastly, if we are to dip below 6k, it will likely piggy back off of some FUD news -- acting as catalyst as we approach 6.5k. Such a scenario could send us down to test 6250, and 6000, respectively.
If this were to happen, then I would sooner anticipate a break of 6k, which open the flood gates for capitulation down to 5.5k (and possibly 5k-4.8k respectively).
Ideally, however, a continued rally to 8k would happen before back-peddling to 6k and 5k, respectively. Then again, we may never see 6k again, and go on to break 8k and 10k, which would force many Bears to pull out their Bull costumes by Holloween ;)
Let's see what happens.