Without knowing the impact of the Golden Week backlog of wired funds to Mt. Gox, it is probably wise to re-enter now rather than waiting this dip out much further hoping for a drop below $5.
Well, the dip did come, below $5 as proudhon predicted.
So here we are, once again. Wednesday evening (west) / Thursday morning (east). Time to apply the test.
The high in the past week was a little under $5.20 (last week about this time) and the high in the 7 day period prior to that was just a tiny bit higher but also was just under $5.20. So overall it looks like a downtrend does continue. And as a result then, for the second week in aA row, the Weekend Dip indicator is flashing green.
This situation has historically been followed with a dip over the weekend. The weekend dip strategy then suggests to sell bitcoins heading into this weekend and to then buy them back if a selloff occurs. The time to buy back will vary. If there is a quick selloff, then the rally back might be quick as well (usually thanks to arbitrage).
Last week selling at $5.084 and then buying back Sunday afternoon (west) at about $5.035 caused the trade to basically break even after considering the exchange fees. Perfect timing with waiting and seeing the drop below $5 would have garnered a bit over a 1% gain.
As of this writing, the exchange rate is bouncing between $5.02 and $5.07 but it appears to be headed down. Being the first to sell as it goes down further gets the best price, so there's no gain from being patient here. So, here goes ... selling at $5.05 into the weekend, hoping for a dip.
Factors that might cause selling at $5.05 to end up being a dumb move?
Well, there's a few things going on in Europe, for one. Bitcoin is probably seeing some demand as a result. BitcoinNordic writes:
"Demand has lately been too high for us to keep up. Expect a refill of Bitcoins in a day or two. Also, we're acquiring more liquidity soon."
Additionally, the novelty among first-time players of SatoshiDICE should be wearing off soon but their daily transaction counts are holding up, meaning here's another area where Bitcoin serves a need very well. And the weekend dip strategy had never been tested with this scenario of a runaway success afoot. As the currency finds wider and wider use elsewhere as well, the demand will go up.
As a result of a promising future, fewer parties are willing to sell aggressively. They and others look to buy more with anything that looks like a dip.
If a new rally up is to start could it come between now and Monday? It has happened before.
Whatever the chances though they probably pale in comparison to the weekend dip strategy's success ratio.
And for that reason, selling at $5.05 might not end up being a mistake after all.