Bitcoin finally broke out of its symmetrical triangle pattern visible on the 4-hour time frame as sellers took the upper hand. The price could be in for a slide that’s around the same height as the chart pattern from here.
The triangle spans $9,500 to $13,000 so the resulting selloff could be at least $3,500 tall. The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse.
However, RSI is already indicating oversold conditions or exhaustion among sellers. Turning higher could confirm that buyers are taking over and could spur a bounce next. Stochastic has room to move south before hitting the oversold region, so a bit more selling pressure could stay in play before buyers return.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with the broken triangle bottom around $9,500. A shallow pullback could already hit a ceiling at the 50% level near $9,200 or the 38.2% level at $8,900.
BTC/USD Chart – TradingView
Many blame the launch of bitcoin futures on Bakkt as the reason for the slide, especially since similar moves were seen after the CME and CBOE futures launch back in 2017. Some say that it was also partly due to the lukewarm reception among investors, possibly hinting that market interest has waned.
Still, Joe DiPasquale CEO of BitBull Capital says:
“Bakkt’s futures will gather traction in time and it is too early to judge the service based on initial volume. Ultimately, Bitcoin’s fundamentals remain strong and we expect the price to recover back towards $10,000 in the coming days.”
Another factor was the drop in hash rate or computing power of the network recently, although this is also expected since it has been making new all-time highs prior.
Images courtesy of TradingView
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