Bitcoin might be done with its slide as it failed in its recent attempt to break below the $3,550 lows. This could lead to the formation of a double bottom on its 1-hour time frame.
Price has a lot of room to climb before testing the neckline, more so breaking above it. The 100 SMA is below the longer-term 200 SMA, though, so the path of least resistance is to the downside. In other words, the selloff is more likely to persist than to reverse. The gap between the moving averages is widening as well.
RSI already reached the overbought zone to indicate that bullish pressure is exhausted and sellers are taking over. Stochastic is also pointing down after recently reaching the overbought zone, confirming that bearish momentum is about to pick up. In that case, another test of the lows could be in the works or perhaps a break lower.
A move past the neckline around the $3,800 mark, on the other hand, could spur a climb that’s around the same height as the chart formation, but it would take a considerably strong catalyst to sustain such a move.
Recall that bitcoin previously formed an inverse head and shoulders pattern on the longer-term chart and that price broke past the neckline. However, the rally was short-lived as bullish pressure didn’t pick up as strong as anticipated, so sellers quickly rushed to take advantage of higher prices to short.
This confirms that investors are still feeling particularly cautious about bitcoin and the entire industry as positive developments have yet to be reported. Much of the gains have been riding on optimism for institutional investments this year but data has yet to come out to confirm that banks and funds are putting more money in the industry.