Bitcoin Price Analysis – Catch the Drop on a Pullback

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Bitcoin Price Key Highlights

• Bitcoin price recently broke below an ascending channel support visible on the 4-hour time frame and a pullback is happening.
• Price could make a retest of the broken channel support before heading further south and resuming its selloff.
• Bitcoin price fell sharply last week when top exchanges in China halted client withdrawals following a meeting with authorities.

Bitcoin price appears to be pulling back to the broken channel support before carrying on with its downtrend.

Technical Indicators Signals

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is still to the upside. However, the short-term moving average is holding as dynamic resistance for the time being and might be enough to keep near-term gains in check.

If so, another test of the 200 SMA dynamic inflection point could be underway and a break below $950 might be enough to confirm that bearish momentum is getting stronger. From there, bitcoin price could test the key support at the $900 area next.

Stochastic is indicating overbought conditions and is crossing lower, also hinting that sellers are gaining traction. RSI is on middle ground, barely offering strong directional clues, but also appears to be turning slightly lower to suggest a return in selling pressure.

Market Events

Investors are once again feeling the jitters in the Chinese bitcoin market, as a couple of main exchanges announced that they would be halting client withdrawals for a certain period in compliance with anti-money laundering requirements. This led several traders to close out their positions for fear of having their funds locked up in other accounts as well.

For now, traders are keeping a watchful eye on developments in China, as this represents the vast majority of bitcoin transactions. In the meantime, renewed demand for the US dollar on subdued geopolitical risks and strong economic performance is also preventing BTCUSD from advancing. Further downside is eyed unless market confidence is once again restored when Chinese authorities refrain from introducing more measures to curtail trading activity.

Charts from SimpleFX