Bitcoin continues lower: short-term outlook
On 24 September I focused on the negative descending triangle pattern in Bitcoin. I warned about a potential break below the lower trendline support of this pattern at around $9450/9400.
The article was published on the Intertrader blog: https://www.intertrader.com/en/blog/bitcoin-bears-appear-to-be-slowly-taking-control/
I wrote: ‘This means we could break below the red 200-day moving average, currently at $9720 but rising, the 100-week moving average at $7800/7750 and the green 500-day moving average at $6700.’
I was particularly lucky with this call. Within hours the price broke the support level for a sell signal and Bitcoin went straight to $7733. In the following four weeks we consolidated again as you can see in the four-hour chart below.
As you can see the price has just broken down again, to continue the short-term bear trend and hit the longer-term 61.8& Fibonacci support, coupled with the three-month trendline you can see in the daily chart below.
Let’s zoom in on that chart to see how prices have bottomed exactly at this support today.
Although not oversold at this stage, there is a chance of a short-term bounce. I am going to focus now on the six-minute chart to identify realistic targets for this bounce.
It looks likely we can reach $7650/60 and it would not surprise me to see strong resistance at $7850/7900. This is definitely a good area to re-enter short positions with stops above $8000.
A break below $7200 will be our next sell signal and I then expect Bitcoin to head towards quite good support at $6760/30. We will be oversold at this stage so I would expect a bounce from here on the first test at least.
Technical Analyst & Trader
The content of this article is the personal opinion of the author and not Intertrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.