Bitcoin is on course to end this week on a bearish note, losing roughly 5% from its previous weekly close of $442. The cryptocurrency failed to cross the resistance posed by the peaks of the past couple of weeks and faltered. Post the sell-off, bitcoin is trading at $419.69.
The sell-off occurred yesterday as market participants got tired of the extended consolidation and booked profits. The weekend weakness will make it tough for bitcoin to regain lost ground very soon. It may even witness further price depreciation as it has violated the support lent the low of the last week i.e. $428.42.
Taking a look at the weekly BTC-USD price chart from BITSTAMP, it can be inferred that bitcoin was trading in the overbought territory.
Chart Structure – Bitcoin hit a low of $407.25 during the recent profit booking. The action took place on lower volume as the participants flee the market to enjoy the holidays. For now, $465 is the resistance for bitcoin.
Bollinger Bands – From the chart above, it can be clearly seen that bitcoin was trading above the upper range of the BB, which itself acts as an immediate barrier.
Momentum – The Momentum reading, which had shot to a 2015-high of 194.4900, has now eased to 158.6400.
Money Flow Index – The MFI continues to extend its stay near the 2015-highs at 78.0441.
Relative Strength Index – The RSI has left the overbought region and now has a value of 67.6810.
The recent correction might prove to be healthy for bitcoin as the cryptocurrency was evidently trading at overheated levels. Levels closer to $400 can be used to accumulate the cryptocurrency until $360 is pierced on a weekly basis. The upside target remains the stiff resistance of $465.
The market may choose to not break this range of $400-465 for the next couple of weeks.