The bitcoin price kicked off this week on a depressive note, extending its current bearish bias to another low level.
The BTC/USD index fell from 5502-fiat to 4886-fiat on Monday, recording more than 11 percent in losses. The price action bled through crucial support levels that had a history of reversing bearish trends. It confirmed how investors are looking to take a break from cryptos until its political scenario improves. The recent Bitcoin Cash hard fork has set the market on fire, with big mining pools jockeying to decide the fate of the BCH protocol. An average retail investor should not want to wait through the storm and watch his investments dry out.
Mainstream media also has a role to play in distributing the negative event in its true colors. A report from Bloomberg published recently predicted that bitcoin would bottom out near $1,500. Bitcoin bull Tom Lee also slashed his longstanding year-end $25,000 prediction for bitcoin by a whopping 40 percent.
Meanwhile, the US Dollar today slid to its two week-low compelled by negative comments from the Federal Reserve. While a bearish dollar could prove bullish for commodities, its impact on bitcoin and similar digital assets would be a thing to watch out for next year.
Let’s check out what our long-term indicators are telling us.
BTC/USD Technical Analysis
The BTC/USD rate is sliding down inside a falling wedge. A break below the 100-period simple moving average is now pushing the pair towards its next potential support level at 4634-fiat. This level has proven strong during the consolidation action from August 2017 to September 2017. Nevertheless, if broken, it would switch to being an equally strong resistance level on the next potential bounce back — probably from the $3,500-3,580 range.
The falling wedge formation, meanwhile, is bullish. We cannot tell where a potential reversal would be, owing to the unpredictable nature of the BTC/USD pair. Typically, a breakout action resulting from a falling wedge goes up to the height of the wedge. In our case, the height is circa $4,300. Thus, a potential bounce back followed by a break above the upper trendline of the falling wedge could provide a medium-term bullish relief.
To the downside, the current falling wedge formation finishes at $543. It does not mean that BTC/USD should fall to this scary low. It is only to provide a hypothetical long target should the price reverse from the very end of the wedge pattern. That said, the worst we can recover is towards $4,843 (the sum of $4,300 and $543). The BTC/USD rate at the time of writing was 4986-fiat.
Today, we’ll refrain from posting our intraday take, for we are not trading the bearish market as of now.
Trade safely, if you are.
Featured Image from Shutterstock. Charts from TradingView.