We’ve been talking about it for days, and last night Bitcoin (BTC) broke out of its consolidation pattern to the downside, after being tightly packed into the apex of the structure.
Looking on the 6-hour, we see that price broke just as expected from the local consolidation. The RSI on this timeframe is already getting oversold – although we see that it has recently gone much lower.
It is likely that a new downtrend has been laid, at least for the short term. BTC will likely have a relief rally soon, and the strength of this prospective counter-rally will inform the market about what to expect. Bitcoin will have to rebound all the way back up to $10,000 – and above – to have any chance of canceling out a new downtrend.
Stepping back to the 12-hour chart, we see that Bitcoin has already reached the territory of a support zone with several retests under its belt. This support level holds up what could be considered a descending triangle structure, a bearish structure – and we must remember that support/resistance levels often break after multiple retests.
Bitcoin could still recover at that support level and return to the top of the pattern. However, the general picture on this timeframe is not very comforting.
Turning to the daily chart, which we have used before here, we see that the market seems to have chosen a downtrending parallel channel. The uptrend here has clearly been lost, and excepting a swift recovery, it seems at least somewhat likely that the bottom of this channel will again be tested within support starting at about $8,750.
We also note here that volume on this chart (Coinbase) is still trending down, suggesting that the real fireworks are ahead.
Finally, we should bear in mind the general criterion for the long (2019-20?) Bitcoin uptrend to continue. During the 2016-17 Bitcoin bull market, price did not close below the 21-week exponential moving average (EMA) – it pierced but did not close.
We can see on the chart above that price is indeed steaming toward this level, sitting at almost exactly $9,000. In the coming days and weeks, we should remain aware of this level on the weekly chart.
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