Bitcoin broke below the neckline of its double top on the 4-hour time frame to signal that a downtrend is in the works. The price has pulled up to the 38.2% level that lines up with the broken support around $10,500.
This is also in line with the moving averages’ dynamic inflection points. The 100 SMA is crossing 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.
RSI is heading up to show that bullish momentum is in play but the oscillator is nearing the overbought zone to signal exhaustion. Stochastic is also heading up so the price might keep following suit, but buyers could be exhausted soon as the oscillator is dipping into the overbought region.
If the current levels hold as resistance, the price could resume the drop to the swing low at $9,074 or lower. A larger pullback could last until the 50% level at $11,135 or the 61.8% level at $11,621.
BTC/USD Chart – TradingView
Bitcoin recently suffered a selloff as the increased interest in the cryptocurrency industry was faced by similarly increased criticism from US officials. With that traders are wary of possibly increased regulation from officials, which might derail the potential progress.
It didn’t help that Nouriel Roubini or “Dr. Doom” warned against cryptocurrency exchanges. In his blog post, he wrote:
“Cryptocurrencies have given rise to an entire new criminal industry, comprising unregulated offshore exchanges, paid propagandists, and an army of scammers looking to fleece retail investors. Yet, despite the overwhelming evidence of rampant fraud and abuse, financial regulators and law-enforcement agencies remain asleep at the wheel.”
Roubini concluded that “It is high time that US and other law-enforcement agencies stepped in. So far, regulators have been asleep at the wheel as the crypto cancer has metastasized.”
Images courtesy of TradingView
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