One Bitcoin is valued at $128.76 at the time of writing, dangerously approaching the resistance level of 130 US dollars. Technically speaking that resistance level would be enough to convince me to sell any Bitcoin I would had previously bought for around 50 to 55 dollars or to short-sell. Given the fact though that I have no experience of the Bitcoin exchanges or even the slightest idea of whether short-selling Bitcoin is actually allowed, I’m merely left to predict a reversal of this week’s up trend.
The support and resistance level of Bitcoin at 130 dollars is quite important. The digital currency had previously found support when it collapsed from $250 on April 10. Three days earlier I had written in my Greek blog why I wouldn’t invest in the Bitcoin’s bubble when Bitcoin was still trading for $140. Although Bitcoin’s price almost doubled shortly afterwards, in the end we’d better have bought Bitcoins for $50 a couple of days later. Of course investing in Bitcoins at that time might have seemed quite risky, despite the fact that quite a few investors actually bought the first time Bitcoin found support there, as the volume graph shows. Perhaps they trusted the round number of $50 which had also been a support level back on March 23.
Anyway, I find much more attractive a buy on April 16, when Bitcoin was again valued at $50 for the second time in a matter of days, forming a double bottom. Apart from the support level, additional technical indicators, such as the doji candlestick drawn at the first bottom, further improved the level’s significance.
I would say that since the outstanding skyrocketing price of Bitcoin and the even more frightening decline that followed, Bitcoin will most probably trade at prices inside the channel between $50 and 130 the next days. Of course, predictions are not bullet-proof and I can’t rule out a possible breakout at prices higher than $135. On the other hand, I would much rather buy Bitcoin for $50 and sell at the resistance area of $130, than buy at a price level where several sellers found attractive in the past.
Side-note: Until I finish writing this post, Bitcoin has hit $135! Maybe those who have been selling gold futures lately have turned into Bitcoin investors!
The 4-hour Bitcoin graphs come from bitcoin.clarkmoody.com.