The eagle eyed among you will have noticed that this chart is little changed from our last post. You will also recall our suspicion that the market was transitioning from trend to range mode and that the most likely scenario in that case, was a failure to breach its top, at $960 Gox, and a subsequent retracement back into the range.
Let's have a look at the chart:
This is why we have seen the market mark time ever since $960 was hit and more recently, momentum build in the other direction.
As it stands price is hovering around the inflection point at $920. If this gives we will likely see downside momentum build as active traders target the bottom of the range, at $860 or possibly $835 beyond it.
If and when this triggers, the sudden burst of momentum will again be pronounced but when we get there, the wall of support, coupled by active trading money coming back off the table, should once again stop the movement in it's tracks, and after a period of stagnation the cycle will set itself up for a repeat.
This is the nature of ranges. They are infuriating for momentum traders but for those with the savvy and bravery to trade from their limits, they can be very profitable.
Having said this there's always a possibility that the market will look back to the North from where we currently sit - and if it does this will be bullish - but in our view the probability of this occurring is not sufficiently strong to make it trade worthy.
So, for the moment our intention is to keep an eye on things, sit on our hands and ponder a further BUY trade at the bottom of the range.
Investors - as you were. It's all cool.
Rob @ BitScan