Bitcoin Back on the Defensive After Price Hits Two-Week Low
Bitcoin’s (BTC) price dropped to two-week lows earlier today and could extend the decline to key support near $6,100, technical charts indicate.
The leading cryptocurrency was teasing a bullish move 24-hours ago, having carved out a lower high of $6,270 along the support of the trendline connecting the Oct. 11 low and Oct. 31 low.
The defense of the key trendline support was also backed by a bullish divergence of the MACD (moving average convergence divergence) histogram.
Even so, BTC failed to pick up a bid, possibly due to sharp losses in US equities, and fell back to $6,252 in the Asian session today – the lowest level since Oct 31. BTC was last seen changing hands at $6,285 on Coinbase, representing a 0.80 percent drop on the day.
BTC has breached the ascending trendline support on the 4-hour chart, adding credence to the lower highs and lower lows pattern created from the Nov. 7 high of $6,540.
The relative strength index of 32 is also biased toward the bears. So, a deeper drop could be in the offing. The bearish setup, however, would be invalidated if prices cut through the descending trendline, representing lower highs pattern.
Over on the 3-day chart, BTC looks set to test support at the trendline connecting the June 24 and Aug. 14 lows, currently at $6,113, having charted a “gravestone doj” (bearish reversal pattern) earlier this month.
The bearish candlestick also marks the bulls’ failure to capitalize on the sideways breach of the triangle pattern, witnessed at the end of October.
- The drop to two-week lows has likely opened the doors for a test of the trendline support at $6,113. A 3-day close below that level would strengthen the bear grip on BTC, allowing for a drop to June lows below $5,800.
- On the higher side, the weekly high of $6,540 is the price to beat for the bulls. That level could be put to test if prices beat the resistance at $6,383 (falling trendline hurdle on 4-hour chart).
Disclosure: The author holds no cryptocurrency assets at the time of writing.