Here is a daily bar chart that sometimes I use to keep track of a bull or bear market trend.

An interesting thing to note about this chart is that XBT/USD is below a dropping 200 days moving average (red line), a typical bear market setup. XBT/USD is also below its 50 days moving average (black line); both averages are dropping confirming the bear market.

Reactions within a bear market typically take a security above its 50 days moving average and up near its 200 days moving average. The 2014 June top is a good example of a reaction ending at the 200 days moving average and above the 50 days average. The position of the 200 days moving average should be considered as the upper limit of a rise within an ongoing bear market.

The first sign that the bear market is over would be a rise of XBT/USD above its 200 day moving average followed by a rally back to or slightly below the 200 day moving average which reaches a sideway or improving 50 days moving average; this configuration for example happened in april-may 2012 at around $5 for then climbing up to $15 in August.
Right now the market appears to be a bit away from this kind of bull market signal but not too much considering that XBT/USD can quickly rise up to or above 550 dollars (200 days average) even in a single day. This quick rise could reverse the 50 days average to the upside and in a couple of weeks reverse also the 200 days average confirming the birth of a new bull trend.

To conclude I think there is a lot of short term bearish sentiment in the market but the bullish news constantly hitting the headlines are increasing the odds of a sudden rise back to the resistances (both averages ranging from 525 to 550 dollars). Still, such a reaction might not be fatal to the bear market trend, so in any case we just have to watch the market’s behavior relative to these moving averages to draw a final conclusion about the bitcoin’s fate. I encourage everyone to add these 2 moving averages to their daily chart.

Many of you are probably asking to themselves if i suddenly turned bearish about this market, yes and no because i consider the 50 and 200 days moving average approach not a perfect one, it might be good for the stock market but for bitcoin that is a new market it might be different, Why? probably because of its insane volatility level that can quickly change the overall picture.

Personally as long as XBT/USD stays above the top of its previous cycle (April 2013 top at $266) and with a rising network difficulty  I’ll never be fully bearish as i’ve already explained many times in the past.

NOTE: The attached below chart is the composite of four main exchanges: btce,bitfinex,btc-china and bitstamp.