After diminishing the gains over the weekend, Bitcoin has started this week on a poor note. The virtual currency has failed to respect the crucial support zone of $236-238, and now runs the risk of a huge decrease in the market cap. Hopes are high that the level of $234 may not get violated very soon.
Each Bitcoin can currently be bought for $235.98, 1.05% cheaper than yesterday’s $238.50.
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Upon technically analyzing the 240-minute BTC/USD price chart, it can be concluded that all is not yet lost for the virtual currency.
Bitcoin Chart Structure – After failing to sustain at higher levels, Bitcoin cracked the floor decisively. The disappointing price action has significantly reduced the chances of a positive turnaround in the fortune of bulls while greatly enhancing the possibilities of deeper downsides.
Fibonacci Retracements – I had mentioned in my previous analysis that Bitcoin was wobbling near the 23.6% Fibonacci retracement level and was struggling to hold its head above this level. The cryptocurrency now looks to the 38.2% retracement level of $234.67 to establish strong footing.
Moving Average Convergence Divergence – Increased losses could also be attributed to the dying momentum. The MACD indicator has dived into the negative region while the Signal Line maintains its positive stance. The latest MACD reading is -0.1728 while the Histogram value is deeply negative at 0.6682.
Relative Strength Index – Bulls have lost complete control over the underlying strength, which is also confirmed by the 14-4h RSI reading of 43.9991.
Conclusion
Breach of the crucial support zone is expected to have bearish connotations for Bitcoin. However, since another strong buying level i.e. the 38.2% Fibonacci retracement level of $234.67 is in close proximity, it only makes sense to adopt a wait and watch approach until the market selects a direction. When even the market is undecided, it really isn’t wise to trade on speculations. Avoid trading for now.
