Not such a smiley day for bitcoin bulls as the breakout we reported in our last post failed to follow through.
Let's have a look at it on the chart:
The figure One marks the initial breakout and at this stage everything looked good, but when the follow through buying didn't materialize the market did what came naturally and looked back at $960 (Gox) to retest previous resistance as support. This happens at point 2 but when insufficient buyers come in at this level, we go through it in the other direction.
This has dealt a meaningful blow to the recent bullish complex, leaving in its wake a significant barrier of resistance (red elipse) above the market, even if we should rally from here.
Below the market points 3, 4 and 5 indicate the price points where sufficient buying power may emerge to reverse the current bearish order flow.
For active traders this is obviously something of a blow. Those that bought on our last BUY advice at around $920 (Gox) should either already be out at break even or thinking seriously about getting flat. Those that bought earlier on our BUY advice at $750(Gox) also need to be paying attention.
With respect to what next it is difficult to recommend a BUY at $835 (Gox) on the basis that we just made a lower high, meaning that sellers emerged at a lower price with sufficient power to reverse the order flow.
As ever, investors can afford to be more sanguine but regardless, the situation for bitcoin looks significantly less rosy, in the short term at least, than it did just 48 hours ago.
Hey Ho; this is the way it goes sometimes. We can only trade the levels, based on what we see. At the time of our last post all the lights looked green, but with the break back down through $960, we need to be clear that they switched back to amber.
Watch this space...
Rob @ BitScan