As Bitcoin approached the end of the triangle pattern yesterday which had been forming since January, it underwent a steep drop. Price dropped from around $6660 to an intraday low of around $6250, an over 6% decline. The drop took place on significant volume showing some strength behind the move. The volume was over twice the 20-period average daily volume.
The drop also brings an end to the low volatility and consolidation we have been seeing over the past two weeks. The Average True Range (ATR), a measure of volatility, has been moving lower almost every day for the past two weeks as price consolidated. The latest price drop has seen a rise in volatility as the ATR moves from its 2018 low of 188 to near 205. The consolidation we have seen over the past two weeks also seen the RSI trading around 50 with equal pressure from buyers and sellers. The pressure is now on the side of sellers with the RSI trading below 40.
Price action is trading close to the triangle pattern. Although the drop brought price action outside of the triangle to the downside, the price has risen back up and is trading near the trendline that makes the bottom of the triangle. The $6250 mark has long acted as a support level and has acted as such in the event of this drop. Price bounced as it approached the $6250 support point. Price is back trading at the bottom trend line of the triangle pattern which may be now acting as some resistance. A close outside of the triangle to the downside would be a bearish signal.
- Price dropped as it approached the end of the triangle pattern which has been forming since January. The drop was on significant volume.
- Volatility has risen after forming consecutive 2018 lows every day for almost two weeks.
- RSI has dropped to 40 as seller pressure increases.
- The bottom trend line of the triangle pattern may be acting as some resistance. A close below this line would be a bearish signal
- $6250 is expected to act as support.
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