Bitcoin (BTC) is currently still being squeezed into a tightening range, with support at $6,300 being a key level for the bulls to defend, technical charts indicate.

The leading cryptocurrency carved out a temporary bottom around $6,100 earlier this month and crossed resistance at $6,600 last Friday, confirming a double bottom bullish reversal.

However, the ensuing rally ran out of steam at highs above $6,800. More importantly, prices have fallen back below $6,600 this week, invalidating the bullish setup.

While the price action witnessed in the last seven days is demoralizing for the bulls, only a move below $7,400 – support of the trendline connecting the Sept. 8 low and Sept. 18 low – would confirm a bearish revival.

As of writing, BTC is trading largely unchanged on the day at $6,480 on Bitfinex.

Daily chart

On the daily chart, BTC has charted a bear flag – a bearish continuation pattern – which indicates the sell-off from the monthly high of $7,429 would resume if the cryptocurrency finds acceptance below the flag support (support of trendline from Sept. 78 lows) of $6,400.

A bear flag breakdown, if confirmed, would open the doors to $5,400 (target as per the measured move method). Moreover, it would also validate the bearish view put forward by the negative crossover between the 5-month and 10-month exponential moving averages (MAs).

Still, the bears would need to observe caution as the area around $6,000, which has acted as a strong support in the recent past, may put the brakes on the sell-off.

Hourly chart

Over on the hourly chart, BTC is already on the defensive, having breached the rising channel to the downside. Further, the 100-hour moving average (MA) has just crossed the 200-hour MA, confirming the path of least resistance is to the downside.

As a result, the odds of BTC falling below the crucial support of $6,300 in the next 24 hours are high.

View

  • BTC could be in for a bigger drop toward the June low of $5,755 if the flag support of $6,300 is breached.
  • On the way lower, BTC may encounter strong support around $6,000. A solid rebound from that level would neutralize the bearish setup.
  • On the higher side, a convincing move above $6,588 (previous day’s high) would weaken the bearish case put forward by the hourly chart.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View

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This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.