Bitcoin sold off sharply yesterday but is now finding support at the bottom of its falling wedge formation. A bounce could take it up for a pullback to the nearby resistance area, which lines up with the top of the wedge.
Applying the Fib retracement tool on the latest swing high and low shows that the 61.8% level lines up with this area of interest. This also coincides with a former support area around the $6,000 mark where short-term buyers might be looking to book profits off a quick bounce.
RSI has reached the oversold region to signal that sellers are feeling exhausted and could use a break. However, the oscillator would need to turn higher to indicate a return in bullish momentum. Stochastic has a bit more room to fall before reflecting oversold conditions, which means that sellers might still have enough energy left in them.
Bitcoin has tumbled below key support areas on prevailing uncertainty related to the Bitcoin Cash hard fork. The digital asset is still in the middle of a “mining war” as the community is struggling to reach a consensus on which version to support. This could lead to the existence of two separate versions of the cryptocurrency, leading investors to worry that this type of issue might also arise at some point for bitcoin.
With that, it’s understandable that the concerns have led retail and institutional investors to take some money off the table and wait for the situation to settle. Of course FUD has led other sellers to join in for fear of further declines in bitcoin price. Analysts have warned that it could take months to undo this recent slide.
Although bulls continue to defend these current levels, it’s a bit worrisome that yearly lows are being tested, which means that this might be the line in the sand.