Bitcoin might find another reason to pause from its slide as it forms a bullish divergence seen on the daily time frame. Stochastic made higher lows while price keeps making lower lows. The oscillator has yet to climb out of the oversold region to confirm that buyers are returning.
If so, Bitcoin could bust through the descending channel that’s been holding since last month. A move past the $4,000 mark could be enough to signal that a reversal from the slide is underway, but Bitcoin has a long way to go before undoing the latest slide.
The 100 SMA is safely below the longer-term 200 SMA on the daily time frame to signal that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Also, the gap between the moving averages is widening to reflect stronger selling pressure.
RSI is starting to turn higher from the oversold region, though, so there could still be a chance of bullish pressure picking up. If sellers stay strong, the price could hit the support levels marked by the Fib extension tool next.
The 61.8% level is closest to the channel bottom around the $3,200 level while the full extension is below the $2,800 mark. A strong rally, on the other hand, could hit a ceiling at the $6,150 area which previously held as strong support.
Bitcoin continues to struggle to pull up from its dive as sellers have been quick to return while buyers are also just as quick in booking profits off short-term rallies. Several analysts are holding on to upbeat forecasts but traders seem to be waiting for actual industry developments before reestablishing larger positions, which could be the same behavior exhibited by institutional investors next year.
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