Yesterday, we saw Bitcoin go down on BitStamp by 0.3%. The volume was higher than on the day before yesterday. All in all, a move up was invalidated and Bitcoin closed below $600 (solid green line on the chart above). This smacked of possible bearish implications.
Today, however, Bitcoin has been on the rise (this is written before 10:45 a.m. EDT), 1.9%. If the move itself looks convincing, the volume on which the move has taken place does not. The currency is still below $600. All of this is more bearish than not.
Currently, it seems we’re seeing a stop or pause in the recent move down. The current period seems to be particularly important – a move above $600 could be indicative of a continuation of the rally. On the other hand, if we see a move down away from $600, it might be the beginning of more declines.
Our best bet now is a rebound and a move above $600. This could be a buying opportunity.
On the long-term BTC-e chart, we’re seeing a situation that has dual traits. Firstly, we’re still below $600 and the current price moves suggest that the depreciation might not be all over; a move to around $500 could still be possible.
Secondly, however, we look at the long-term trend and still see a significant breakout. The recent depreciation hasn’t even reached the higher of the two trend lines visible on the above chart, let alone the 50% mark of the recent rally. Even though the short-term trend is down and more depreciation might be just around the corner, the situation is tense enough not to suggest going short at this time. This is primarily because of the possibility of a strong move above $600 — such a move could mark the beginning of another strong rally, possibly to $700 or even higher.
We said yesterday that the depreciation scenario seems all the more possible and that once this depreciation is over, we might see another rally in the market. This is still up to date.
In our opinion, the current situation is tense and no short-term trading positions should be held at this moment.