Bitcoin has formed a complex double top on its 1-hour time frame to suggest that sellers could return. Price has yet to break below the neckline around $8,500 to confirm the drop.
The chart pattern spans $8,500 to $9,000 so the resulting drop could be of the same height. Stronger selling pressure could take it down to the lows near $7,250. But if support holds, another top around $9,000 might form.
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, the climb is more likely to resume than to reverse. However, the gap between the moving averages has narrowed to signal weaker bullish momentum and a potential downward crossover.
Stochastic is climbing to suggest that buyers still have some energy left for a bounce. However, the oscillator is also nearing overbought conditions to show that bulls are getting exhausted and may let sellers take over.
RSI has more room to climb so bitcoin could follow suit. If bullish pressure is strong enough, bitcoin could even break past the tops to test the next ceiling closer to $10,000.
Dollar strength has returned in the previous week mostly due to geopolitical risks. This stems from several factors, the strongest of which are trade war concerns. Trump confirmed plans to impose higher tariffs on Chinese goods and officials in China have responded saying that they won’t back down if push comes to shove.
Bitcoin also seems to have lost the positive momentum from the G20 Summit as a fresh set of headlines revealed stricter regulation efforts, particularly in Japan. If this keeps up, investor jitters could continue to lead to liquidation and a slide in bitcoin price.
Still, exchanges remain hopeful that volumes and activity could be sustained and might even pick up as more developments arise in the industry.