Bitcoin is still hovering around the bottom of its falling wedge pattern and might be due for a break lower. The price is finding support at the 38.2% Fib extension, though.
Sustained selling pressure could still take it down to the 50% extension around $9,000 and the swing low. From there, the next downside target is at the 61.8% level or $8,572.60 then the 78.6% level at $7,872.92. The full extension is just below the $7,000 level.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. The gap between the indicators is widening to reflect increased selling pressure or hint at a possible downside wedge break, which could spur a drop that’s the same height as the formation.
RSI is still hovering around middle ground to signal that consolidation might follow while stochastic is pointing up to suggest that buyers are returning. In that case, bitcoin might still make it up to the 200 SMA dynamic inflection point near the $12,000 level or possibly even climb to the top of the wedge.
BTC/USD Chart – TradingView
Bitcoin continues to tread carefully as traders await possible announcements from US officials as many are holding out for stricter oversight. Recall that interest in the cryptocurrency industry spiked when Facebook made its Libra announcement, later on triggering cautious remarks from the likes of Fed Chairperson Powell and US President Trump.
However, one factor that could still buoy bitcoin and its peers higher might come from China. Recall that a Chinese court previously upheld the cryptocurrency’s status as property, possibly setting a precedent for other jurisdictions and lawmakers. Some even believe that this could overturn the ban that prevents Chinese citizens from using exchanges to swap bitcoin for fiat currencies.
Images courtesy of TradingView
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