Another consolidation pattern can be spotted on bitcoin as price is moving inside a falling wedge on its short-term chart. Price is down to support and might be due for yet another bounce to the top around $3,800.
The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse or support is more likely to break than to hold. In that case, bitcoin could slide by the same height as the wedge, which spans $4,300 to $3,600.
In addition, the gap between the moving averages is widening to reflect stronger selling pressure. The 100 SMA is just below the wedge top to add another layer of resistance while the 200 SMA is in line with the $4,000 major psychological resistance.
RSI is starting to pull up after indicating oversold conditions, though, so there’s a chance that buyers might still return and prop bitcoin higher. Stochastic has some room to head lower still, so sellers could stay in play until oversold conditions are met. A pickup in bullish pressure could lead to a test of the top or an attempt to break higher.
However, bitcoin still seems to be reeling from the earlier declines as analysts are pushing back expectations for when this digital asset could recover. Many say that it could take months before the recent slide is unwound, even with a pickup in institutional investment. Besides, there are still lingering doubts that banks and funds could put funds in the industry in this bear market.
On the flip side, there are those who maintain bullish forecasts that might be reached by the end of the following year. It would take an actual pickup in volumes and activity buoyed by institutional investments before bitcoin has any hope for a recovery.