In my previous analysis titled Follow This!, I advised that market participants create short positions by placing a stop-loss just above the downward sloping resistance level for a target of $280. Since yesterday’s $285.63, Bitcoin has plunged nearly 2 percent to an intraday low of $279.46 and is now trading at $281.01.
Now that the price has descended to the support level, will it rebound or will it pierce the support and head even lower? Let’s try to find that out with a technical analysis of the daily BTC-USD price chart.
Bitcoin Chart Structure – As the gap between the resistance and the support narrows, it becomes highly likely that a breakout will be witnessed sooner than later. Failure of Bitcoin to rise above the previous peak and repeatedly retest the support of the descending triangle may ultimately lead to a breach of the floor.
Fibonacci Retracements – The 38.2% Fibonacci retracement of $280 has once again acted as a cushion to falling Bitcoin.
Moving Average Convergence Divergence – MACD, Signal Line, and Histogram report lower readings as things turn more negative for Bitcoin. The latest values are 2.6263, 4.8240, and -2.1977 respectively.
Momentum – The Momentum has undergone another cut; the value as of today is -13.2800.
Money Flow Index – The MFI remains strong with a value of 59.4824.
Relative Strength Index – The RSI fails to provide any clues regarding the future course of action with a reading of 50.5122.
Bitcoin is being sold on rallies, which are limited by the downward sloping trendline. My expectation is that the support will be breached eventually and we will see $250-260 on Bitcoin in the coming weeks.
As the trading range gets tight, I would advise the market participants to refrain from trading until a breakout occurs. Expect the volatility to spike in the coming sessions.