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  • Bitcoin Reversal Could Lead To A Test Of Post-Crash Support Area 0 comments
    May 5, 2013 9:13 PM | about stocks: USD

    May 3, 2013 (Coinalpha.com) - In a classic reversal play, Bitcoin kept encountering steep resistance at the top of its recent range when bulls finally gave up, selling pressure mounted and lead to a break below $100 that could open the door to a test of the $50 post-crash support area.

    For seven consecutive trading sessions, the virtual currency fluctuated within a range between $120 and $160. Although Bitcoin made a number of attempts and even overshot slightly above $160 for a couple of days, it was unable to muster the strength needed to produce a decisive breakout.

    As we noted in our previous analysis, Bitcoin's inability to break higher should be considered as a sign of weakness.

    Moreover, we warned that such scenario could send a signal that the two-week long price correction of Bitcoin's losses from $266 to $50 may be coming to an end and could give traders a green light to push the virtual currency back to $100.

    Not only did Bitcoin move to our target level at $100, but it also broke below this important area, reaching a low today at $79. At the time of this writing, the virtual currency still lingers below $100, currently at $93.10 on Mt. Gox- the world's largest Bitcoin exchange.

    (click to enlarge)

    BTC Daily Chart Provided by Bitcoincharts.com

    In our view, the break below $100 is a significant sign of weakness because it shows the market's disregard for this level as the last potentially strong support ahead of the $50 mark.

    Although we would not exclude the possibility for Bitcoin to try to climb back above $100 with a few overshoots, we feel that this level may become difficult to overcome.

    If this is the case and the virtual currency fails to transition and maintain above $100 in the days ahead, a move lover and a test of the $50 post-crash support area should be only a matter of time.

    Stocks: USD
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