Bitcoin (BTC) might defend the speedy help of $6,000 within the short-term because the current downtrend is wanting overstretched, in accordance with technical research.
The world’s largest cryptocurrency by market capitalization fell for the third straight day on Wednesday to hit a three-week low of $6,121 on Bitfinex and was final seen buying and selling at $6,320 – down 26 p.c from the July 24 excessive of $eight,507.
Notably, nearly half of the 26 p.c drop witnessed within the final two weeks has occurred within the final 48 hours, which signifies the buyers have been left unimpressed by the US Securities and Alternate Fee’s (SEC’s) determination to postpone any motion concerning a bitcoin ETF proposal from VanEck SolidX Bitcoin Belief.
So, there’s little cause for the bulls to make a robust comeback within the short-term. However, the bears might have reached a degree of exhaustion, having engineered a close to 90-degree sell-off within the final two weeks.
The technical charts are additionally indicating the bitcoin market is nearing oversold situations. Consequently, we might be in for a bout of consolidation or a minor corrective rally. That stated, it’s nonetheless too early to name a bullish development reversal because the momentum research are nonetheless biased towards the bears.
Each day chart
The above chart reveals, BTC convincingly closed (as per UTC) under the ascending trendline yesterday, boosting the percentages of an additional sell-off.
The cryptocurrency has additionally discovered acceptance under $6,357 (78.6 p.c Fibonacci retracement of the rally from $5,755 to $eight,507), which solely provides to the general bearish tone of the market.
Therefore, a drop to $6,000 (psychological help) can’t be dominated out, though the bearish momentum is prone to wane because the relative energy index (RSI) is closing on the oversold territory (under 30.00).
Additional, the short-duration charts are additionally reporting oversold situations.
The RSI on the Four-hour chart fell again under 30.00 (oversold ranges) and hit the bottom stage since June 22 earlier immediately, which means the cryptocurrency is most oversold in seven-weeks.
Consequently, BTC might commerce in a sideways method or might witness a minor corrective rally within the subsequent day or two.
Nonetheless, the sustainability of the positive factors is underneath query because the 50-candle MA has crossed the 200-candle MA from above (bearish crossover). Extra importantly, all three main MAs (50-candle, 100-candle, and 200-candle MAs) are positioned one under the opposite, indicating the trail of least resistance is to the draw back.
What’s extra, the 5-day and 10-day MAs proceed to slope downwards in a bear-friendly method.
- The bearish momentum in BTC might wane within the subsequent 24 hours, permitting the cryptocurrency to defend the speedy help of $6,000.
- A corrective rally can’t be dominated out however is seen operating out of steam across the downward sloping 5-day and 10-day MAs, presently positioned at $6,660 and $7,000, respectively.
- A day by day shut (as per UTC) above the 10-day MA would weaken the bearish strain considerably.
- Acceptance under $6,000 would shift threat in favor of a drop to $5,755 (June lows) and might be adopted by a “V-shaped” restoration to sq. one as the symptoms are flashing oversold situations.
Disclosure: The creator holds no cryptocurrency property on the time of writing.
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