Yesterday, Bitcoin went 2.7% up on BTC-e on increased volume. The short-term outlook might have seemed bullish but only if one treated that day in isolation. When considering the action in the context of the overall trend, the short-term outlook remained unchanged and bearish.
If you recall, in our Bitcoin Trading Alert posted on Monday we wrote the following:
If there is a difference, we’ve seen it today, not in the price, since Bitcoin is also down on BTC-e, but in volume as the trading has been visibly weaker today than it was yesterday. Our bet here would be that the stagnation on BTC-e will be followed by depreciation stronger (not much but still) than on BitStamp.
This is precisely what we saw today. Bitcoin went 9.3% down on BTC-e as compared with 8.2% down on BitStamp. The volume exploded and the bearish short-term outlook has yielded concrete results.
On the other hand, right now it seems possible that we’ll see a counter move which would erase some of the current gains. As this is our bet now, we’re of the opinion that closing short speculative positions and cashing in now might be a good idea.
We had first suggested this short position in our Bitcoin commentary on Apr. 18 when Bitcoin was around $467 on BTC-e. Since then the currency has gone down to around $447 at the moment of writing these words. This was a 4.3% move in 8 days.
Summing up, in our opinion profits from the short position should be taken off the table no speculative positions should be held in the Bitcoin market at the moment.
Trading position (short-term, our opinion): no position. If we see a move up now, we might re-enter the short bet at higher price levels.