After a couple of small moves down in the past day or say, Bitcoin (BTC) has continued to consolidate in a firm price range between about $8,400-8,000. The leading crypto has done nothing effective to challenge the forming downtrend, and another leg down for the leading crypto into the next support level down looks pretty likely.
We start with the daily chart, and see the range where most price action has been since Bitcoin broke down in late September. What we have here appears to be a basic bear flag, which is a consolidation off of a drop before another drop.
Volume has been falling throughout October and at this point is very low, which suggests a bigger move will come soon and break the volume profile. Bitcoin never managed to break the 21 exponential moving average (EMA), and the averages are all pointing down.
Looking on another daily chart with indicators, we see that the histogram has started to clearly roll over. If BTC does break $8k and head down, we can expect support to hold -- for a while at least -- at the next big support level between $7,500 and $7k.
If it does hold there, it will probably do so at the RSI uptrend line. If that line should hold, we could see a bull divergence on the RSI, signaling a likely end to a corrective downtrend.
Finally, returning to the Bitcoin dominance chart, we see what may be a pause forming in what has been a steady erosion of Bitcoin’s market dominance from the mid-70% range.
A bull divergence has formed on the RSI, and the histogram looks poised to cross over positive. A falling wedge formation has formed on the percentage (the “price”) data, and we could see a slight pop out of that before returning to a general downtrend -- unless of course, the retrace from 73% to 68% was just a correction before Bitcoin eviscerates the altcoin market and returns to pre-2017 levels of dominance. That is not too likely.
Such a move might pump the breaks a bit on what has been a frothy altcoin market.
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