The leading cryptocurrency, Bitcoin has dropped to a five day low further given investors a clue that the bears aren’t given up just yet.
Bitcoin was reported to have been trading in a sideways manner over the weekend, putting an end to the current bullish outlook. Notwithstanding, price consolidation of the leading cryptocurrency was expected to usher in an upside break given that the short term moving averages (MAs) signaled a bullish momentum on Saturday. That’s not all, this position was further strengthened by a positive support from relative strength index divergence (RSI).
In a twist of event, Bitcoin jumped out of the trading range in the US session yesterday, crashing to a low of $6,203 – the lowest price we have seen since Sept. 12. This indicates that the corrective rally from the recent lows of $6,100 may have ended with Friday’s high of $6,600.
More interestingly, the fall in the price of Bitcoin we saw yesterday shows the revival of the sell-off from highs above $7,400 witnessed earlier this month.
As at the time of writing this report, BTC is trading at $6,250 on Bitfinex and down by 3% on a 24 hour basis.
From the chart above, the bearish flag breakdown signals a bearish continuation pattern. What this means is that the sell off from high of Sept. 2 $7,429 has resumed with price expected to fall as low as $5,000 (target as per the measured move method).
And while that target may look farfetched at the moment, the RSI at 34.00 (bearish and well above the oversold level), and the bearish flag breakdown indicates that price may drop to August low of $5,859 within the coming days.
This bearish outlook could gain more support should Bitcoin find acceptance below the key trendline support, as indicated by the chart.
As you can clearly see from the chart, the trendline connecting the low of June 24 and the low of Aug. 11 has held on nicely and living to its reputation as a key support.
Be that as it may, the probability of a downside break seems very like as Bitcoin has witnessed a bear flag breakdown on the 4-hour chart while creating a bearish outside-day candle yesterday. This clearly puts the bears in control.
If we are to experience UTC close below the trendline support, currently seen at $6,214 that would give a confirmation of a downside break. At the moment, we can only watch and see how the market plays out.