I've always believed in owning up to your mistakes and yesterday we made one. While we suggested that the market might turn at $920 (Gox), we also made it clear that we considered a fall back to $835 far more likely. As a consequence of that bias we cautioned against buying at $920.
Well, 24 hours is a long time in any market, especially bitcoin, and price movement since that last post has proven us wrong. In the event the market did turn at $920 and had you ignored our advice you'd now be sitting on a profit of around $40 a bitcoin.
Anyway, this latest price movement is significant so let us stop dwelling on the past and have a good look at what has happened and what it could mean moving forward.
Here's the chart:
Homing in on the right hand edge of the chart, we can see that in bursting back to the North the market is re-testing the top of the recent range. We can also see that having put in a new swing point this move has generated a new rising support line (green upward sloping). Most significantly, however, is the fact that the move pierced and is currently holding above 2 sloping resistance lines (green downward sloping). What this all adds up to is a formidable band of support, between $920 and $960, against which new buyers will be entering the market - if they are even tested. This is a pretty bullish sign and the fact that it exists may well tempt momentum traders back into positions, further feeding the rally.
As regular readers know we had been anticipating a context shift from trend to range. As of now that view is on notice and based on what we have seen over the last 24 hours, we now feel it more likely that the market will find the momentum to reach up to $1000 at least, which is good news for active traders and investors alike.
Below price, we just need to watch that the market doesn't reverse to below $920 as clearly this would indicate yet another fake-out.
As a final note, anyone still reading this post through blogspot needs to be aware that as of tomorrow, we will be shutting down this service and publishing through the bitscan.com website only. See you all there!
Rob @ BitScan