Well, having stated in our last post that bitcoin's ongoing consolidation might march on for some time, I guess I was asking for the rally that has followed. Let's look at it on a chart:
As you will rapidly note, that rally has carried the market back up to re-test resistance at $960 (Gox), where we have been stalled for the last 12 hours.
What does this mean?
Well, we don't know yet. In our last post I advised that this would be a good point in price for active traders of bitcoin to take profit - and I stand by this advice - BUT, as we look at the chart right now it would be hard to deny that the market is shaping to break through this key price point and if it succeeds the way is clear to $1020 and who knows what happens then.
Having said this we are not conclusively through this level yet and if the buying dries up, momentum will quickly swing in the opposite direction.
And what this serves to remind us is that this market - just like any other - wants to continue doing what it was doing before. What I mean by this is that the longer a market trends, the harder is to shake that trend - as a direct function as the amount of skin that's in the game. Similarly, the longer a market ranges, the more it wants to continue ranging - as a direct result of the amount of skin in that game.
So, we've watched the bitcoin market transition from trend to range. The range is young but it's perceptible. We don't know yet if this range will become another flag on bitcoin's irrepressible journey North or - perhaps more importantly - when it might give. All we can say for the time being is that bitcoin is testing the upper limit of its range,
What should we do?
Well, the one thing we shouldn't do is buy here. Buying here would not represent a value purchase. We are well above the key support level of $750 - where BitScan advised a BUY. This isn't to predict that bitcoin will definitely stall here, only that it might; based on the fact that markets struggle to change their condition and that bitcoin's current condition is a nascent range.
This, of course, will mean little to investors, nor should it as they have time on their side. Investors can afford to wait out the 'noise' and wait for the big moves - and on this point, nothing we see here indicates a major reversal.
That's all we have for now. Stay tuned...
Rob @ BitScan