Bitcoin fell by a massive 26 percent today as we finally got a decent retracement. Initially it looked like another green session, with prices surging to a high of $502 dollars on OKCoin and $459 dollars on BTC-E. But here a large correction began, taking BTC/USD down to a low of $368.11. We are currently quoted at $433.48 on OKCoin, about half-way from the highs and the lows. On the daily chart below the session is clearly visible as a large pin bar.
Bitcoin futures exhibited a similar behavior, albeit at much higher prices. Chinese exchanges are trading at a $34 dollars premium to USD sites at the moment. Most CNY sites are quoting BTC at 2,950 Yuan or $464 USD. Meanwhile USD exchanges are quoting prices around $430 dollars per coin. This price gap is pushing OKCoin futures higher.
The nearer October 6th contract peaked at $542.07, then fell to a daily low of $416.02. It’s currently quoted at $460.04. The far-out December 25th issue saw similar action, spiking to $574.54 before falling down to $450.01. This contract is trading at $507.25 at the moment.
In our last two articles we cautioned our readers that a sizable retracement was long overdue. This pullback doesn’t invalidate the uptrend but it should give the bulls some pause. However to definitively end the current rally, we will need to see a decisive break below $300 dollars per coin. On the other hand, a clean breakout above $502 (OKCoin) should continue the momentum higher. But be careful, there is a possibility for a double top in this area. Large retracements like the one we had today are usually followed with several days of consolidation before the next move is decided.
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