Yesterday, Bitcoin (BTC) bounced at the bottom of what has been its trading range for the past three weeks or so. But that bounce has turned around and the leading crypto is now losing that range, as it slowly slides further down -- down toward a larger move lower.
Starting with the 12-hour chart, we see the frontiers of this range, and that Bitcoin has only closed outside of this range six times since September 26. Very soon, we could see the seventh close outside, and there is a major risk here that Bitcoin could fall to the next major support down. This is the case because Bitcoin is pretty clearly within a downtrend of some degree.
There is still the chance for bulls to push BTC back into its range, but arrayed against the larger downtrend, it is getting ever harder to muster the buy support to mount a decent defense under $8,000.
Moving to the daily chart, we examine a post-drop scenario. The next major band of support is between about $7,500-7k, which area served as support during May-June, when Bitcoin was consolidating on the way up to $14k. This zone will provide at least temporary support if Bitcoin takes a major leg down.
Looking at the daily RSI, we see a -- despite the bleak outlook -- a bull divergence on the RSI, suggesting through all this that Bitcoin could be trying to find the bottom of the present downtrend. We should look for the leading crypto to test and hold this trendline in the event of a further drop.
We also notice on the histogram that, what had been looking like an arch up has been interrupted sharply; an unfortunate fracture of a developing countertrend. The trendlines are still arrayed in a clearly bearish aspect: lowest on bottom and pointing down.
Finally, on the weekly chart, we see a pretty tight range between the 33 and 55 EMAs, forming what still looks very much like a bear flag in the larger picture. Worse, the full “fan” of (Fibonacci) EMAs is making progress at collapsing down into itself, with the 8 EMA traversing through both the 13 and 21 EMAs -- and with the 13 looking to cross the 21 soon.
The more this fan inverts back into itself into a bearish configuration, the more we can expect a long downtrend to obtain.
Overall, Bitcoin looks bearish.
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