After trading in a narrower range for the past few days, Bitcoin (BTC) price fell off its pennant structure and closed below the 20-day moving average ($ 18,600).
Since kicking off at $ 19,888, a number of analysts have warned that Bitcoin price will face a sharp decline unless it can secure a daily close above $ 19,500 or hold at least $ 19,000 as support.
Bitcoin’s price was above the 20-MA during the recent bulls, so a daily close below this metric could be a signal that a short-term trend change is warranted. In this case, too, it seems that bulls haven’t bought the current decline yet.
As the price fell and crypto analyst Alex Saunders neared the daily close, he said, “If $ 18,700 doesn’t hold up, the descending triangle is likely to lead us to a lower price in the short term.”
On the other hand, Cointelegraph analyst Micheal van de Poppe tweeted that despite the drop in Bitcoin price:
“Still in the range, but the more the support is tested, the weaker it gets. The volatility will likely be between $ 18,500 and $ 19,500. “
Van de Poppe went on to explain that “the BTC price level below $ 20,000 has been accompanied by a decrease in volatility and volume, making it increasingly difficult to predict the direction of the next move.”
Now that BTC appears to be trading in a descending triangle, traders will watch USD 18,013 to see if the price can double bottom at the triangle support. Below that level, the visible area of the volume profile and market structure suggest that there is also support at $ 17,800.
The 4-hour RSI is also entering oversold territory, which means an oversold rally could occur. However, this move requires significant purchase volume to push the price back to the 20MA where resistance is likely to exist.
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A bullish turn in events would mean BTC hit the double bottom mentioned above and then fold back the 20 MA and $ 19,000 levels to support a 4 hour or more close.
On the other hand, if $ 17,800 is not considered a support, Bitcoin price could fall to $ 17,200 and then to $ 16,400, which is close to the 23.6% Fibonacci retracement.
In a previously published analysis, Micheal van de Poppe also found a large CME gap from $ 18,275 to $ 16,995.
According to van de Poppe:
“In general, 95% of the CME gaps are closed, which increases the likelihood of the price dropping to this level in the short term.”
This suggests that the failure to hold the above levels as support increases the likelihood that Bitcoin price will snatch the liquidity below and hit the $ 17,000 level again.