The profit booking which began since Bitcoin hit a high of $278 continues. Bitcoin price has dropped 2.37% since yesterday to be trading at $264.55. With this decline, the cryptocurrency also breached a near-term support of $267 and I believe the next downside target is $260.
The 240-minute BTC-USD price chart above indicates that Bitcoin may face more pressure as technical indicators as well as the chart structure have turned bearish.
Bitcoin Chart Structure – A simple glance at the above chart would reveal a Head and Shoulders pattern – a bearish pattern which indicates a trend reversal. The neckline of the pattern has been breached decisively, which opens the downside to approximately $260. The bulls did attempt to reverse the breakdown but failed.
Moving Average Convergence Divergence – In a big negative, the MACD has crossed the Signal Line on the downside, plunging the Histogram value into the negative territory. The latest MACD, Signal Line and Histogram values are 1.9228, 3.4834 and -1.5606 respectively.
Momentum – The Momentum indicator reading has also fallen sharply reflecting the bearish sentiments in Bitcoin. The Momentum reading has dropped drastically to dive into the negative zone; the latest value is -8.8800.
Relative Strength Index – That bulls are temporarily losing the grip and Bitcoin is on course for more weakness is also mirrored by the 14-4h RSI value of 49.4028.
Bitcoin may remain under pressure until the bearish Head and Shoulders pattern completes by hitting $258-$260. Since a lot of long positions were created, panic liquidation may take the price even lower. Market traders may consider building light short positions on rally by placing a stop-loss above $268 (closing basis) for the aforementioned downside target.
For those who are still interested in buying bitcoin should wait for cheaper valuations to invest in.
Expect bouts of volatility to hit the market on a timely basis.
The 240-minute BTC-USD price chart above indicates that Bitcoin […]