Bitcoin has formed lower highs and found support at the $9,300 area to create a descending triangle on its 4-hour time frame. The price is currently testing the resistance and could be due for a move back down to support soon.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside or that resistance is more likely to hold than to break. In addition, the 100 SMA dynamic inflection point lines up with the top of the triangle to add to its strength as resistance.

The gap between the indicators is widening to reflect increased selling momentum, so a break below support might even be possible. If so, bitcoin could be in for a drop that’s around the same height as the chart formation, which spans $9,250 to $11,750. Similarly, a break past the resistance could be followed by a rally of the same size, although the price might hit a roadblock at the 200 SMA dynamic inflection point.

BTC/USD Chart – TradingView

RSI is still heading up to show that bullish pressure is in play and could stay on until overbought conditions are seen. Stochastic is also on the move up to show that buyers have the upper hand, but the oscillator is closing in on the overbought region to signal potential exhaustion soon. Turning lower could lead sellers to return.

Bitcoin continues to await updates on potentially stricter regulation as US officials have been meeting to discuss how cryptocurrencies could impact the financial system and what they should do about it. This comes after the Facebook Libra announcement last month which put the spotlight on the industry as a whole, particularly when strong rallies among well-known altcoins started taking place.

Apart from that, traders might be holding out for the FOMC decision, which is likely to feature an interest rate cut and hint at the possibility of one more easing move before the end of the year.

Images courtesy of TradingView

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