Bitcoin had a sharp selloff last week but the support of its long-term triangle held and the price looks ready for a bounce back to the top. The moving averages are still oscillating to signal consolidation conditions, so the resistance might hold again.
Besides, this is right in line with the broken rising channel seen on shorter-term time frames. If the area holds as a ceiling, Bitcoin could make its way back down to the bottom of the triangle again, until a catalyst spurs a strong break in either direction.
Stochastic looks ready to move south after reaching overbought levels, which suggests a return in selling pressure. RSI, on the other hand, has room to climb so buyers could stay in the game for a bit longer. A move past the triangle top around $6,600 could lead to a rally that’s the same height as the triangle pattern while a break below the $6,200 lows could mark the start of a downtrend.
Bitcoin has had a rough previous week, starting from the IMF warning on cybersecurity risks related to cryptocurrencies onto the ICO crackdown by the SEC. This led many to drop expectations for a bitcoin ETF approval anytime soon, as regulators are likely focused on potentially fraudulent action that could harm consumers.
However, Bitcoin bulls are strongly defending support zones, and the higher lows suggest gradually strengthening bullish pressure. Then again it would take a strong catalyst to sustain any big moves in a particular direction. It also appears that the low liquidity conditions are leading to more volatility, as even smaller position sizes are leading to more pronounced price reactions.
Looking ahead, a lot of the focus could still be on regulatory developments, although risk sentiment might also play a role in determining bitcoin direction.
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