Resistance is clear

Heres a look at Bitstamp with 1hr candles. Have zoomed out a bit so the April 2013 bubble can be seen next to the December one.

First that resistance. I have a very obvious line marked in red going from the second peak of the double top trending down through subsequent dead cat bounce tops. So far this is constraining any bullish attempts for rally. The huge move up during the Ukraine crisis failed to get bitcoin above that trend.

I’m also persisting overlaying the fib retracement on the chart which shows strong looking support around $520. Twice that has been penetrated and price fallen to roughly $400, once on the collapse of the bubble and recently with the ugly death of MtGox. I’ll be rather surprised if the downtrend takes us below $500 again though.

Based on eyeball comparison of April bubble with the December bubble I’d say the wild price gyrations are coming towards an end now. I’m expecting that red resistance line will be broken soon enough and maybe some kind of gradual rally but it could be quite a while until we are back over $1000. There is still possibility final capitulation didn’t actually occur during the MtGox and bearish tendencies could regain control for a while later on asd happened in July 2013 prior to the start of the huge rally.

For posterity heres a last look at my long term channel with MtGox data, log chart.

MtGox is no more, it managed to drop right back into my long term channel but its not the death of bitcoin. The baton has now passed on to Bitstamp, BTC-e and others. Will these exchanges prove trustworthy? Or as with MtGox will temptation or poor security or government interference get in the way?

8 thoughts on “Resistance is clear

    1. Hi, thanks for commenting. That particular log chart doesn’t really bring anything to today’s analysis its just my last look at an old view I used to refer back to often (MtGox versus my long term log channel). I was really intending it to be more an open question about the bitcoin exchanges and how long they can be trusted.

  1. It’s starting to look like that downtrend red line and the line at 400 that held the two previous spike bottoms are going to converge and price isn’t going to do anything until it breaks through one way or the other. Do you agree?

    1. Yes I’d agree with that although I think there is also likelihood of support higher than that, $400 would be strong support if it gets that low. But yes it looks like a convergent wedge is forming.

      I think break up is more likely than down however I have to admit as bitcoin gets bigger I am starting to worry about scalability. Compared to precious metals I consider bitcoin is a risky investment. I only invest what I prepared to lose.

      1. According to your chart, what month and day does the red downtrend line reach $500? Sometimes it’s boring when I log-in every few hours and see that price has barely moved. I’m just getting antsy for the next big move πŸ˜‰

      2. Red downtrend line reaches $500 on 14th April, not sure I could say big moves will follow. I think bitcoin market could get boring for quite a while. By the time I’m posting only once every couple of weeks will probably be the bottom (time to buy), then when I’m posting twice a day (time to sell). πŸ˜€

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s