The downtrend has been quite strong since breaking down at the 2300 level in December. I believe that we are going to see a correction very soon. In the short term, the market is oversold due to panic and the bitstamp issue. I believe that the market is waiting for the resolution of this issue before rallying. In fact I think that the market will rally on news that bitstamp is online, which is scheduled to happen tomorrow. There is a short term abcd that will complete around 1840. I think we will see a pullback in that area before continuing up towards the 1900s. From there, I think it is likely that we will eventually test 2100, but that we will not break through that level. I think that the longer term trend is bearish, and that we will not be able to break through the 2300 level. In December I was convinced that we were transitioning into a bullish trend, but the past month has shown that I was very wrong.
Another consideration to make is that shorts are at an all time high on bitfinex (and probably elsewhere). However, an alarming amount of these short positions were opened in these relatively low prices (lower than $300). Selling pressure has subsided, and I believe a large amount of these shorts are from inexperienced traders. They are due to get squeezed out in the correction, and this may provide buying pressure to get us to the 2100-2300 range. If you are looking to take a short position, you should do it after these shorts get squeezed out or you may have a tough time. I would be very careful shorting below $300 for now.
Another consideration to make is that shorts are at an all time high on bitfinex (and probably elsewhere). However, an alarming amount of these short positions were opened in these relatively low prices (lower than $300). Selling pressure has subsided, and I believe a large amount of these shorts are from inexperienced traders. They are due to get squeezed out in the correction, and this may provide buying pressure to get us to the 2100-2300 range. If you are looking to take a short position, you should do it after these shorts get squeezed out or you may have a tough time. I would be very careful shorting below $300 for now.