Bitcoin Back Against $8k as Key Support Gives Way – Price Analysis

  • Short term trend: Unrelenting downtrend obtains
  • Long term trend: Chance of trend reversal to the upside almost faded

Yesterday, Bitcoin (BTC) took another tumble in a month replete with tumbles, through an important support zone. The leading crypto is now threatening to completely cancel out its October 25 surge, and resume a very long term downtrend.

Starting on the 4-hour chart, we note the red band of support – now resistance – which has given way. This area contained the “golden pocket” region of the Fibonacci scale, 0.618-5, which is often the site of trend reversals. But after two tests of this area, the third test gave way.

golden pocket destroyedBTC chart by TradingView

Bitcoin is now testing the $8,000 level itself, and has been held there so far almost to the dollar. The final common level of the Fibonacci scale, 0.786, has not quite been tested yet. We should also note that sell volume on this drop has not been fantastic, but to see this in more detail we should go to a finer-grained chart.

On the 30-minute chart, we can see that plenty of the volume from the previous chart was support volume, with buyers coming in to catch the leading crypto between $8k and $8,200. A double bottom has formed on this very short timeframe above $8k, and – assuming the current price is a low – on this formation we see a bullish divergence forming on the oversold RSI.

Chance of bull div?BTC chart by TradingView

Still, given the negative high-timeframe profile that is forming this week – covered in depth yesterday – we must acknowledge that the trend has turned against the bulls. Counting on a reversal here is thus rather dangerous.

Stepping back a little to the daily chart, we again get a sense of this bearish direction. On the daily RSI, trendline after trendline is breaking, as RSI again heads toward oversold conditions as it did during the end of October. But again, we might point on that volume on the last three major dumps (including yesterday’s) has been in decline every time.

Ebbing sell volume overall, thoughBTC chart by TradingView

Here, the last major support we could expect starts at $7,800, which is where the leading crypto was held during the October consolidation.

Confused daily histogramBTC chart by TradingView

Looking only at the daily histogram indicator (above), we can see that an aggressively downtrending direction does not look smooth at all: Typically, we often see round and predictable changes in momentum, with the occasional fake; but here, the sawtooth pattern speaks to the extremely contentious struggle that has played out on the charts.

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