Bitcoin Price Faces Struggle to Hold Above $11K After Range Breakdown
Bitcoin could drop below $11,000 in the next 24 hours, after sellers took victory in a four-day-long tug of war with the bulls.
- Bitcoin's short duration charts indicate the bears are in control and prices could drop below $11,000 in the next 24 hours.
- A strong bounce from the 5- and 10-week moving averages at $10,804 and $10,625, respectively, could fuel a rise back to $12,000.
- A high-volume weekly close (Sunday, UTC) or a back-to-back daily close above $12,000 is needed to revive the bullish outlook.
Bitcoin (BTC) could drop below $11,000 in the next 24 hours, after sellers took victory in a four-day-long tug of war with the bulls.
The top cryptocurrency's trading range had tightened in the four days to Aug. 9, with prices printing lower highs above $12,000 and higher lows in the range of $11,200 to $11,650.
That contracting triangle pattern represented a stiff battle between the bulls and the bears, as well as bullish exhaustion following a 35 percent rally from July 28 lows near $9,100.
A range breakout would have meant a continuation of the uptrend. Prices, however, dived out of the narrowing price range on Saturday, confirming victory for the bears.
The range breakdown had been expected, as a key technical indicator on the intraday charts was flashing signs of bearish reversal, as discussed on Friday.
So far, the downside has been restricted to levels around the former resistance-turned-support of $11,100. The cryptocurrency dipped to a low of $11,080 on Sunday before rising back above $11,500 earlier today.
As of writing, BTC is changing hands at $11,355 on Bitstamp, representing little change on a 24-hour basis.
BTC fell from $11,871 to $11,200 in the 60 minutes to 12:00 UTC on Aug. 10, confirming a downside break of the narrowing price range. The breakdown was backed by a surge in selling volume, as represented by the red bar (above left).
On the line chart (above right), BTC has dived out of an inverted flag – a continuation pattern that accelerates the preceding bearish move.
The flag breakdown has opened the doors to $10,800 (target as per the measured move method).
Seasoned traders may consider a long-tailed hammer candle created in 60 minutes to 10:00 UTC on Sunday as a sign of bullish revival. The candle, however, lacked volume support.
That said, the hammer would gain credence if prices rise above the flag high of $11,589, in which case a rise to $12,000 could be on the cards.
BTC created a candle with a long upper wick last week, as it failed to close (Sunday, UTC) above the $12,000 mark.
Notably, the cryptocurrency has failed four times in the last seven weeks to find acceptance above $12,000, as indicated by the candles with long upper wicks.
It is often observed that markets test dip demand after facing multiple rejections at key price levels. So, a pullback to sub-$11,000 levels, as suggested by the intraday chart, looks likely.
Note that the ascending (bullish) 5- and 10-week moving averages are currently located at $10,804 and $10,625, respectively.
A strong bounce from these levels, if any, could yield a break above $12,000. A bull revival, however, needs a weekly close above $12,000. That would imply a resumption of the rally from April's low near $4,050.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via CoinDesk archives; charts by Trading View
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