Well, it's been another exciting 24 hours for bitcoin as we broke out of consolidation and up through resistance on momentum; something we spoke to in our last post.
Anyway, here's how it looks on a chart:
There's a couple of things to focus on here. Firstly, we wanted to draw your attention to the candles formed after we first broke out of the consolidation wedge. Bearing in mind that each candle represents a 4 hour time-span you can see how the market closes outside the wedge a first time, but stalls and retreats back inside. This will have given a few trigger happy active traders butterflies to be sure.
At the second breakout the market again looks back at old resistance as support. Only when this is rejected does it pick up its skirts and bolt North. I've indicated the perfect entry point for the active trader (with the green horizontal line) and it's where the market trades beyond the upper limit of the breakout candle.
You see how quickly it moves once confirmation of the breakout is recognized? Remember, this is fed by those bitcoin bears, buying back their short positions at a loss. This is what feeds the positive order flow and gets the upside momentum pumping.
Anyway, here we are +10% later, and we see 2 options from here...
On the one hand, Europe is open for business and new buyers could give the market another shot in the arm.
On the other, the current surge is looking a bit 'toppy' here. With this in mind, don't be surprised to see the market retrace to re-test the previous high ($900 on Gox), or somewhere close to it, as support. If this support zone is rejected by a fresh wave of buying, we will see a further acceleration North and in all probability fresh highs.
And if it gives? Well, that'll be a different story, but not one bitcoin bullls need contemplate for the time being. So let's just enjoy the moment!
Okay with you?
Rob @ BitScan