Bitcoin Price Analysis: Any Support Area In Sight?

Bitcoin Price Analysis: Any Support Area In Sight? 13

Bitcoin broke below short-term consolidation to signal further bearish momentum. Price is inside a descending channel on its daily time frame after previously breaking below a longer-term uptrend line.

Price is closing in on the mid-channel area of interest near the 38.2% Fibonacci extension level. A move below this could take price down to the next potential support at the swing low or $6333.7 at the 50% extension.

Stronger selling momentum could lead to a move to the 61.8% extension near the $5,000 mark, which several analysts are already eyeing. The 76.4% extension is around the channel support just below $4000 while the full extension is all the way down at $759.9.

The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside or that the longer-term uptrend might still resume. However, the gap looks ready to narrow, which would reflect a pickup in bearish pressure. Note that price is also breaking below the 200 SMA dynamic support, which might be the line in the sand for the uptrend.

Bitcoin Price Analysis: Any Support Area In Sight? 14

Stochastic is near oversold levels to signal that bears are feeling exhausted while RSI has some room to head lower. This could keep selling pressure supported, likely drawing bitcoin down to the next floor if market catalysts continue to weigh on cryptocurrencies.

In particular, traders are turning their attention to the upcoming G20 Summit during which world leaders would likely discuss cryptocurrencies. It’s already known that a number of officials have been wary of these developments and would like to see stricter regulation. In that case, worries among investors about shutdowns or investigations could spur another wave lower.

It’s also worth noting that the dollar remains strongly supported ahead of the FOMC decision next week since the central bank is widely expected to hike interest rates. Although they would likely express some caution, this could bolster the dollar’s safe-haven appeal versus riskier assets like bitcoin.