BTC had climbed as high as $227 72 hours ago, bouncing 40% from a new 14-month low of $162.68 on BTC-e. Since then, however, the rally has lost steam and the price has gravitated back toward the $190-200 range–an indication that a critical bottom has not been reached and a large-scale rally is not yet in the works.
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Even during the relatively calm trading this weekend, the after-effects of last week’s price shock are still being felt. Price swings are still on the scale of 10% or more within a few hours. Two hours ago, the price spiked by 13% to $213 on renewed volume, but the peak is still lower than the previous one during the 72-hour period.
Even in the current downtrend, short sellers should be aware of the ever-present risk of a sudden jump in prices and the accompanying “squeeze” which is likely to occur.
The recent drop has sent the 50-day moving average (MA) to nearly $300. BTC has traded below this indicator since falling to nearly $350 in early December. Should BTC recover to the upper $200s during the coming weeks, it may actually cross paths with the MA and make for some interesting technically-inspired moves.