We have just returned from an extended trip into Latin America where BTC are used in some places just as readily as cash. Here is our advice for the current state of the BTC market.
We’re starting to get a little nervous about bitcoin market behaviour. Followers of our recommendations should now have sold out of their long positon, 1/3 at $425 showing almost $100 profit from the purchase level and the balance at $360 at a much smaller profit.
But what now?
The chart shows a failure of the market to break the 50% retracement level of the major leg down ($680 -> $275) on the recent rally up to $454. We have now drifted down on poor volume back to the $360-$370 level (with a low on the move of $342). While the declining volume on this move gives us some encouragement (the move seems more caused by lack of interest than genuine selling) we are concerned that the recent auction will create a ready pool of sellers looking to lock in some profits (assuming they were bought at a discount which seems likely).
We will take a short position on a break below the recent low of $342, a break of this level is likely to be indicative of auction winners selling into the market. I would start with a 1/3 position and then see how the market develops, we wouldn’t be surprised to see the market retest the lows below $300 if the $342 level is broken.
On the upside we are now in wait and see mode, we see nothing constructive in the price action to lead us to take a long position at this time.
Good Luck from First Global Credit