Bitcoin (BTC) Price Analysis: Just a Bearish Pullback?

Bitcoin (BTC) Price Analysis: Just a Bearish Pullback? 13

Bitcoin is trading lower below a descending trend line and looks due for a pullback to this resistance level. Price is bouncing off the $6,600 long-term support and might need more bearish pressure to sustain a drop below this floor.

Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with the trend line at $7,300. The 50% level is closer to the previous swing low at $7,150, which might also be enough to keep gains in check.

The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. These moving averages are also close to the trend line and highest Fib, adding strength to this resistance.

RSI is on the move up to signal that buyers have the upper hand. However, this oscillator is nearing overbought conditions and turning lower could bring sellers back in. Stochastic is already in the overbought territory to indicate that buyers are felling exhausted.

Bitcoin (BTC) Price Analysis: Just a Bearish Pullback? 14

Bitcoin suffered a sharp selloff after it was reported that a small South Korean exchange was hacked. Even though only lesser-known cryptocurrencies were affected, investors couldn’t help but worry that security issues in the industry are still lingering.

Besides, traders are also worried about the ongoing probe by US regulators into price manipulation by cryptocurrencies. Results suggesting that prices were manipulated by groups of traders or companies could further erode trust in the industry.

Meanwhile, the dollar has the US CPI and FOMC announcement to contend with. Strong inflation numbers and a hawkish hike could bring more gains for the dollar versus bitcoin while downbeat CPI results and cautious FOMC remarks could allow bitcoin to recover further.