Bitcoin’s price action is having some brief respite today from the hard losses of the week thus far. Analyst opinions were mixed when Bitcoin was trading in the $6700 to $6800 range last week with many noting $6850 as the point where momentum will turn positive.
However, the gains of last week now look to be a bull trap and Bitcoin seems much more likely to hit sub $6000 levels. Today’s brief gains are on small volume, indicating a further drop could occur over the next day or two. Support to be expected at $6000 and $5800 levels.
Longer Term Trend:
Bitcoin’s price action has been forming lower lows and lower highs since December on the weekly chart. RSI on the weekly is still far from oversold territory showing that we may be in a prolonged bear market similar to the one occurring in 2014.
The daily chart also shows the longer term downtrend in Bitcoin with lower lows and lower highs since the brief $20,000 high in December. RSI on the daily has been venturing into oversold territory regularly showing that upward movements such as today’s and those of last week are to be expected, but it is advised to be cautious of bull traps as the trend is still predominantly downward.
Shorter Term Price Analysis:
On the hourly chart, price action is currently trading near the 50EMA which is likely to be acting as resistance. $6750 to $6850 will act as strong resistance with price failing to break this level last week. But in the near term, 50, 100, & 200 EMA on the hourly time frame should be seen as the key resistance levels.
Analysts are viewing $6850 as a potential turning point as this would break the pattern of lower lows and lower highs on some of the larger time frames which can act as a catalyst for a change in trader sentiment.
Key resistance levels to note include the $6000 level and the $5750 to $5800 level. Buying pressure at the $6000 level may not be as strong as the last time it approached this level as traders will be aware that price action has recently traded in sub-$6000 levels. So the key support level to watch out for is $5750 to $5800 which represents the all-time low of 2018.
- Levels to watch out for are $6850 as a potential turning point, but with this being far from current price action, the hourly moving averages are to be noted for resistance points. Key support levels to note are $6000 which may not provide as much support as the last time price action traded at this level, along with the all-time low of 2018 which is in the $6750-$6800 level.
- Some analysts are optimistic about price level bottoming out, but traders need to be cautious of bull traps given the longer term downtrend we are currently in.
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