Originally published in the Bitcoin Bull Bear Short Term Market Update issued on 12/9/2013.
General Market Commentary:
It seems as though BTC/USD has put in a short term bottom at 576 $ and has since rallied back up to resistance around the key 900 $ level. In the past 24 hours, the market moved up past 900 $ to test the 1000 $ mark, but failed to make it there before selling off back down. The push higher has been on much lower volume and seems to lack the conviction necessary to retest the 1242 $ level, therefore we remain neutral to bearish on the market for the time being.
The volatility in the market has been extreme as a new very wide trading range is now in effect from the 576 $ low to the 980 $ high put in last night. Given the technicals discussed below, the current sentiment about bitcoin, and a drying up of media coverage, we see a continuation of the range as a good possibility and think the most likely direction for the market is down given the market is at the top of the range and only a breakout above 1242 $ would reignite the previous bull market.
Market Update:
We update the 60min chart below to show the short term price and technical action. As you can see, the correction was sharp and on higher than average volume, while the bounce has been lackluster and on lower than average volume. After breaking above the short term downtrend line, another weak high was put in at 980 $ and the market now appears to be caught in this wedge.
As far the the indicators, the RSI is showing momentum receding once again, the 14/40 Stochastic is bearish and is confirming the downtrend, and the MACD is flattening out. On the other hand, the 18/25 EMA crossover is still bullish and the market has retaken the 50 and 100day EMA’s in addition to the 4hr Ichimoku Cloud. It is clear that there is indecision in the market which confirms out call for a range bound market in the short term.
Important levels to watch are 900 $, 800 $, 700 $, and 576 $ to the downside, and 1000 $, 1150 $, and 1242 $ to the upside. In this environment, extreme caution is advisable as opportunities are difficult to capitalize on and markets can turn against a trade very quickly.
BTC/USD 60min Chart from December 9, 2013:
BTC/USD 60min Chart from December 17, 2013:
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