Bitcoin has been pacing back and forth between support around $6,000 and resistance at $6,500, creating a range visible on the short-term chart. Price just bounced off resistance and might need another test of support soon.
The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse or support is more likely to hold than to break. For now, though, the 100 SMA is holding as dynamic support at the middle of the range, and the narrowing gap suggests slowing bearish momentum.
RSI is still heading down, though, so sellers have the upper hand and could keep pushing for a move to the bottom. Stochastic is also moving south but is already dipping into oversold territory to reflect exhaustion. Turning back up could bring some buying pressure to the mix and lead to another test of the range resistance.
A breakout in either direction could lead to a rally or a drop that’s the same height as the rectangle or around $500.
Bitcoin took another hit after Coinbase CEO Brian Armstrong warned that widespread adoption would take much longer than what many think. He said:
This technology is going through a series of bubbles and corrections, and each time it does that, it’s at a new plateau. People’s expectations are all over the map, but real-world adoption has been going up.
He added that that there will be barriers in certain places where governments want to discourage the use of bitcoin but noted that countries in economic turmoil like Turkey or Venezuela could be a strong test case. Recall that bitcoin has also gained ground when capital controls were imposed in Greece as the country struggled to repay its obligations years ago.