Well, its been a busy old week, what with the launch of the website and iOS App, and our attendance of the Inside Bitcoin conference in Las Vegas, but things are calming down now and I'm writing this post from Atlanta on a beautiful sunny morning.
Anyway let's get down to business. In our last post we talked about the significance of the market rejection of strong support at around $600 (Gox) and this has certainly coloured price action since, propelling the market back up to resistance at $1065, if only for a moment.
This is how it looks on a chart:
As you can see, price action since then has been somewhat flaky and this has been accompanied by a reduction in volume. The bottom line is that the market is still consolidating, with the battlelines of support and resistance being re-inforced above and below the market.
While it is possible that the most recent top at $1065 has formed a lower high, we won't know this to be the case until bears succeed in driving the market back through $500. Similarly, it is too early to count on a resumption of the uptrend.
This is the way of things as a market moves from a trending to ranging condition and the only sensible course of action when one sees this is to trade from the extremes of the range, back in towards the centre.
So, for example, we currently like the idea of buying bitcoin at the intersection of horizontal and sloping support, down at $675. In the same vein, if we were minded to liquidate a portion of our bitcoin holding in the near term, $1065 would be a sensible place to do so.
Please don't perceive this as a reversal of our longer term bullish bias. It's simply an acknowledgement of what we see on the chart before us. Consolidation is a natural bed-fellow of the trend. It is normal for markets to pause - to re-charge - on completion of a surge, as new buyers need to be encouraged in.
Our final observation is that the longer this consolidation continues, the more likely it is that the up-trend will resume.
Have a good one,
Rob @ BitScan
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