Bitcoin recently fell through its rising trend line which had been holding since mid-August, indicating that a downtrend is underway. Price is finding support at the $6,300 area, though, and might be ready for a pullback from here.
Applying the Fib retracement tool shows that the 61.8% level is closest to the broken trend line support, which might hold as resistance moving forward. The 38.2% Fib lines up with the 200 SMA dynamic inflection point while the 50% Fib is closer to the 100 SMA.
On the subject of moving averages, the 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to resume than to reverse. However, Bitcoin has tumbled below both these dynamic inflection points to reflect the presence of selling pressure.
RSI has hit oversold levels to signal that sellers are tired and that buyers might take over from here. Stochastic is also starting to move higher so bitcoin price could follow suit, allowing the retracement to ensue.
Bitcoin has had one of its more volatile weeks as it initially got a strong boost from bullish forecasts from Satis Group. However, the momentum was cut and a sharp drop took place when it was reported that Goldman Sachs might drop its plans to create a bitcoin trading desk.
Although these rumors were dismissed as fake news by the firm’s CFO and he added that they are working on bitcoin derivatives, these remarks weren’t enough to revive the rallies so far. It didn’t help that new registration requirements from ShapeShift and rumors of layoffs in parts of Kraken’s operations were also in play.
Looking ahead, traders could turn their focus back to the SEC decision on bitcoin ETF applications, but the mood could be more somber this time. After all, the concerns reportedly raised by Goldman Sachs execs have to do with regulation of crypto markets.
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