Bitcoin (BTC) Price Analysis: Downside Wedge Break But Support Near
Bitcoin was previously consolidating inside a rising wedge pattern and has broken to the downside to signal a pickup in selling pressure. The wedge spans $7,000 to $7,800 so the resulting drop could be of the same height.
However, price is also finding support around the Fib levels marked on the breakout move. Recall that bitcoin also surged past a longer-term descending trend line that’s been holding for the entire month of May. This signals that bulls could be charging but that a pullback is necessary to draw more buying pressure.
The 61.8% Fib retracement level is closest to the broken trend line around $7,300 and could be enough to keep losses at bay. A bounce off any of these levels could take price back up to the swing high at $7,800 and higher.
The 100 SMA is below the longer-term 200 SMA, though, so the path of least resistance is to the downside. The gap between the moving averages is also widening to reflect stronger selling pressure and the 100 SMA has recently held as dynamic resistance.
RSI is on the move down, also confirming that sellers have the upper hand. Similarly, stochastic is heading lower so bitcoin could follow suit. Both oscillators are approaching oversold levels to reflect exhaustion among bears, and turning higher could bring buyers back in.
The US dollar regained ground against its peers in the US session even though there were no major catalysts. Bitcoin barely drew support from Steve Wozniak’s remarks that it is the only digital gold, explaining:
All the others tend to give up some of the aspects of Bitcoin. For example, being totally decentralized and having no central control. That’s the first one they have to give up to try to have a business model.
Some blame technical factors for the drop and are looking at make-or-break scenarios around other moving averages.