You'll probably find this chart extremely messy, and I won't deny that I'm an inexperienced trader - as such I'd welcome any form of feedback or your thoughts on the recent price movements!
So I went long about 2 months ago after the was breached and the well-known lines crossed (indicated in this chart), with the idea of not looking back until the price would be above $5000,-. However, today I went back to bear after seeing the BTC price slowly slipping out of the 600s over the course of last week and reviewing current sentiment, charts and forum posts.
Why I took this trade
- The daily 10/21 crossed, which is often a sign of imminent pressure
- Weekly is decreasing, which indicates there's no sign yet of a new period forming for the upcoming months
- is very weak, although in Bitcoin this alone doesn't necessarily indicates much
- The large amount of positive news recently had zero positive impact on the price, which make it seem that there's little support currently for prices above the 600s, or even in the 600s.
- Daily , and other indicators already seem to be very low, which causes my main uncertainty for this trade I took
- I currently have my bids set on a retrace to ~$475 and even a full retrace back to ~$340,- .
Here is my price correction warning from 18 days ago
Personally I don't think news related to MtGox affects the price and sentiment much anymore, but this is purely based upon my own intuition. What I do believe however is that news follows sentiment and not the other way around - e.g. bearish traders will use any form of negative news to make their move as they already got their mind set.
I think Bitcoin is currently in a price discovery phase, and if I'd be an outsider looking at the price which rose from $13 in January 2013 to $1163,- in the same year - I'd consider that to be 'crazy' and 'unsustainable'. Regardless of it being a technology which most likely will continue to grow exponentially. With that thought in mind further price corrections are a very plausible scenario.
Myself, I don't perform any daytrading at the moment. I mostly look at daily, weekly and yearly charts. This is one of my favorites I like to gaze upon (which also correlates nicely with your $250,- statement).
I too find it a probable scenario, it would bring us 'back to base' - perfect to build up a new bubble from there. Alternatively we could drop to 400s or 300s and start a new 'rally' from there, postponing such event. I find this very difficult to forecast, I guess best would be to assign trades based on probability.