Bitcoin appeared to make a downside break of the consolidation pattern previously highlighted, but bulls rushed in to prop it back up. Price now seems to be forming a shallow bearish channel on the 1-hour time frame as it made lower highs and lower lows.
A test of the resistance is currently happening and a return in selling pressure could take bitcoin back down to the bottom at $7,800. Stochastic looks ready to turn after dipping briefly into overbought territory, indicating that selling pressure is about to return.
RSI, on the other hand, is treading sideways on middle ground to signal further consolidation. This could also keep bitcoin trading slowly inside the channel while waiting for the next set of catalysts.
The 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is to the upside. In other words, there’s a chance for an upside break of resistance. However, the gap between the moving averages is narrowing to signal weaker bullish momentum and a potential downward crossover.
If that materializes, bears could return and attempt another break lower. A move below the channel support could be enough to spur a steeper drop to the next longer-term support levels.
A new poll revealed that retail investors are still mostly wary of the risks involved in trading bitcoin. While a significant percentage have expressed interest, the survey by Gallup indicated that only 2% actually own it. In addition, the firm wrote:
“The price of bitcoin is back on an upswing after crashing earlier this year, causing some to say its bubble is again about to burst and others to argue that its value will only accelerate as more merchants inevitably adopt it.”
Others point to the hash rate as showing more bullish signs as it reflects a faster pace growth in the number of miners joining the bitcoin network.