Bitcoin has dropped from the strong resistance level of $227 following the announcement of the BitLicense regulations. After erasing the gains, Bitcoin was trading at $225.20 previously while today it is trading down 0.86% at $223.27.
The question to be asked now is: Is there more downside left given that the biggest trigger has been digested by the market? I believe the answer is a Yes!
Technical analysis of the 240-minute BTC-USD price chart confirms my bearish stance on Bitcoin.
Bitcoin Chart Structure – Bulls’ first attempt at keeping up the price has been easily thwarted by the bears and now, they must hold $222.50 (closing basis) in order to avoid a swift price decline to $215.
Fibonacci Retracements – As mentioned earlier, the two Fibonacci retracements of 76.4% and 61.8% continue to act as major technical levels for the cryptocurrency. The price is currently taking support from the 76.4% retracement level of $222.55.
Moving Average Convergence Divergence – The decline in price has had a similar effect on the Histogram value, which dropped from 0.5689 to 0.1584. The latest MACD and Signal Line values are -1.3715 and -1.5299 respectively.
Momentum – The Momentum indicator displays a strong bearish undertone with a negative value of -1.0600 while yesterday it was comfortably maintaining a positive bias with a value of 2.3100.
Relative Strength Index – The underlying strength has been subdued once again; the latest 14-4h RSI value is 39.5369.
Technically, Bitcoin lacks the strength to hold its ground and looks poised to cave under pressure. However, this is not to say that the cryptocurrency will break immediately. Market participants must remain patient and consider building short positions on every relief rally while maintaining a stop-loss above $227. Increase your short positions as the floor of $222.50 is breached. The short-term downside target remains at $215.