Bitcoin failed to sustain its climb even after an upside inverse head and shoulders neckline break earlier on. Price is now back to the bottom of its new falling wedge formation visible on the 4-hour time frame.
The 100 SMA is still below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, support is more likely to break than to hold or resistance is more likely to hold than to break. After all, the 200 SMA lines up with the top of the wedge around $3,850 also.
RSI appears to be pulling out of the oversold region to signal a possible return in bullish pressure. This could take price back up to the wedge top or perhaps a break higher. In that case, Bitcoin could climb by the same height as the chart pattern, which spans $3,500 to around $4,300.
Stochastic is also indicating oversold conditions or that sellers are exhausted. Turning higher could allow support to hold, but an increase in selling pressure could spur a drop that’s also the same height as the wedge formation.
Many point to the lack of significant buying support despite the confirmed neckline breakout as the catalyst that encouraged sellers to return. Others once again blamed the lack of market catalysts sustaining the move.
With that, Bitcoin edges close to testing the previous year lows around the $3,200 mark and inching lower to this level could attract even more bearish sentiment. Keep in mind that the break below the $4,000 handle was also blamed for the recent slide, so it could be safe to say that volumes around key technical levels are also being watched closely.
Looking ahead, market sentiment could prove to be the major driving force for Bitcoin and its peers once more, with attention on trade developments and Brexit.
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