Bitcoin Targets 6-7K Levels as The Attempts to Break out 10K FailedColin Baseman
The price of the main cryptocurrency has declined by about 10%. The attention of traders is now focused on 8,800 support area instead of 10,000 resistance area. This downtrend is local and it appeared after the number one according to the Coinmarketcap has failed to break out 10,000 mark. We have also a series of lower highs at 9,942, 9,905, and 9,849.
The price dropped below the bullish pennant after it failed to establish higher highs and the currency pair has lost its momentum. The bearish trend intensified two days later.
Currently, BTC/USD is trying to find the support and it moves inside the ascending channel. However, each time Bitcoin hits the support it becomes thinner. Some traders are expecting to find new support at 6,500 or 7,400. This area is reachable once BTC/USD breaks down 8,575-8,800.
According to the technical image, Bitcoin remains above 200-day and 100-day Mas while it has fallen below 20-day MA. Both 200 and 100-day Mas are situated close to 8,000 level.
Those who work with Bollinger Bands trend indicator may notice that BTC/USD us below the central Moving Average, which is a bearish signal. The closest target is the lower band of the indicator which is located close to 8,460. The price is likely to reach this level if nothing happens.
If we look back at Pril’s predictions, many analysts forecasted 8,000 to be the great resistance area which is hard to overcome. However, BTC/USD managed to overcome this level without any hesitation. This means that BTC/USD may also penetrate through 8,000 without any problem on its way down.
If the price continues to decline, investors may change their mind about 8,000 being strong support. In this case we can see the price to visit 7,400 as a more likely scenario.
Bitcoin is unlikely to decline below 7,400 support area
However, many traders are looking at the reverse H&S formation on the weekly chart and expect the price to decline towards 6,400, this is the right shoulder of the pattern. If this model will be right, the price will test 9,800 as the neckline of the pattern and will target 14,000.
If this happens, the price may even surpass the 2019’s high which was at 13,950. BTC/USD will be able to set a new ATH in the future. However, it is difficult to predict whether the price is going to test the neckline or it is going to rally towards 10,000 to find there the resistance.
If we look at the Relative Strenght indicator we can see that the price of Bitcoin leaves an oversold area as the curve reverses from 30. As for the MACD indicator, it became pink but there is still no signal of reverse.
The strategy of buying the currency pair when it leaves the oversold area was effective since April 16, but currently it looks like this strategy may fail as the price action pattern has no broken LH and LL. Moreover the volumes of buyers are lower than necessary currently.
Those who are looking for long positions may wait until the price grows above 9,250. They also can wait for the price to close above the 20-day moving average, which is close to 9,500. The price will break out the central moving average of the Bollinger Bands indicator in this case.
Those who prefer to sell in such a situation may wait until the price falls below 8,550. They also can wait until the rise of downside momentum. The price will target 7,400 and 6,500 in this case.
If we look at the current situation, BTC/USD is still in the uptrend until the price exits the ascending channel.
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