What’s up traders,

This Friday is going to be extra sweet because it’s the weekend, and we didn’t get scammed by OKCoin. If anyone missed out on the bitcoin action last night: OKCoin weekly futures horribly malfunctioned at settling time causing price to rocket to 284 leaving many traders with short positions with negative balances in their accounts. OKCoin promptly shut down the site and rolled everything back, essentially calling a re do like a kid on the kickball court.

Anyway, let’s get into the charts starting with bitcoin’s hourly intra day levels

As a bull, we really want to see bitcoin break that last high at 224 and continue to make higher lows. This could be an early sign of bullishness. Still, we have to be cautious because a small move up may simply be a retracement day’s high at 229 before resuming down.

As a bear, we are looking at current support at 222-220 breaking down. If this happens, we would be reaching for the daily lows at 216 and possibly taking them out.

Next, let’s check out this bear flag:

A Classic harmonic chart pattern is the bear or bull flag. It occurs when price breaks decisively in a certain direction, stops to consolidate for a bit, and then continues on with another decisive move. We may be seeing a bear flag in bitcoin right now with price being in the consolidation phase.

Another cool thing about the bear flag formation is that we can measure the first leg where price moved down, and expect an equal reaction in price if the consolidation were to break. We are seeing some good confluence in the target of 215 which is the projected second leg of this bear flag as well as a key daily support level.

OVerall, after such a turbulent couple days and with the shock of the OKCoin glitch last night, Bitcoin needs to consolidate and mellow out a bit before it can turn bullish. If bitcoin can’t hold these levels, there may be even more panic in store as we go on to test 215 and possibly 200. Moving sideways for a couple of days and making higher lows would definitely be a good sign, but I don’t know how confident we can be in bitcoins ability to move up with all the bad downward momentum going on. I haven’t seen enough volume to the downside to signify a reversal is in play, but I am always on the look out. If you want to be bullish on bitcoin, wait for the highs at 230 to get taken out and safely buy a retracement, otherwise, look for exuberant selling volume to push prices far below fair value and make your move.

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