Bitcoin seemed on the verge of a breakout above $6,650 but a failed third attempt, followed by a lack of buying interest has given bears an opportunity to snatch back control and it looks like BTC has dropped a shelf for a bit of sideways trading in the $6,200 – $6,400 range.
Bitcoin Price Market Overview
Earlier this week on CNBC Fast Money, host Melissa Lee described the narrow channel between $6k and $7k as ‘Bitcoin Purgatory”. Guest speaker and head of Digital Assets group at Susquehanna International Group, Bart Smith, said “Bitcoin is in show me mode” as the cryptocurrency market currently seems resistant to trend changes driven by good news and positive developments for cryptocurrencies.
Smith believes investors are searching for verifiable proof that the market has turned bullish before setting up positions, hence the sporadic spikes and trend of declining volume for bitcoin.
It seems the entire market is contingent on the SEC’s approval or denial of exchange-traded funds (ETFs) but there are a select few who advise caution against placing all one’s hopes in the approval of such an ETF for a variety of reasons.
Meanwhile, the world, or at least Americans, were introduced to a new Bitcoin Exchange Traded Note (ETN) from Coinshares subsidiary, Tracker One. This provides US investors with a listed (regulated) vehicle to invest in bitcoin via their US brokerages without carrying the burden of needing to secure coins, register on various cryptocurrency exchanges, pay the premium that Greyscale adds or worry about exchange hacks and re-compensation.
BTC [coin_price] completed the inverse head and shoulders formation but a decline in volume followed by a few failed attempts to cross the daily high set at $6,644 lead to BTC eventually collapsing below the bullish trendline and the 55-EMA and 20-day moving average.
At the time of writing, the RSI has worked its way down from bullish territory and BTC appears to have dropped down a leg to last week’s trading range from $6,200 – $6,400.
A pattern of lower lows and lower highs has begun and BTC’s drop below the 55-EMA and 20-MA could resurrect the pattern of rejection at overhead moving averages that has plagued BTC since the drop from $8,500.
A positive note is BTC rides right along the 50-MA and the Stoch has already entered oversold territory, but the RSI continues to slide down below 50 and continued descent could take BTC along with it.
The 55-EMA and 20-MA have been flat since August 16 and the constricting bollinger band indicator could be indicative of further range bound trading even though BTC has dropped back to last weekend’s trading range.
The bollinger band on the 4-hr chart is really starting to tighten up but simply waiting for further constriction may not be sufficient enough proof of an upside move as the Stoch, RSI and bull volume are descending. Currently, BTC trades in the lower band below the 20 simple moving average so traders may be forced to hold tight for an oversold bounce if or when the RSI slips to the twenties.
A glance at the weekly chart shows BTC [coin_price] in the process of setting a lower low on the daily chart and the RSI is fairly close to dropping below the ascending trendline of this week’s earlier divergence.
Below the 50-MA at $6,313, BTC has soft support at $6,230, $6,137 and $6,000. In the event of a drop below $6,300 to $6,200, BTC has a relatively strong support at $6,100.
A drop below the inverse head and shoulders neckline could prove problematic, as would a drop below the $6,300 support but BTC has shown relatively consistent support at $6,300 and $6,100.
Multiple low volume bounces off the $6,350 support point to declining interest from buyers and BTC could drop to $6,200 and below if the RSI continues to descend as bulls weakly defend the $6,300 support.
A move above the inverted head and shoulders neckline ($6,500) followed by a pop above $6,650 (100-MA) would be encouraging.
A move to the key resistance at $6,800 would place BTC above the 38.2% Fib retracement level and back above the descending trend line.
Depending on technical indicators, $6,100 – $6,200 could be an attractive entry point for range traders.
Where do you think the price of Bitcoin this weekend? Let us know in the comments below!
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