Bitcoin has been relatively bullish since the trading started on Monday this week. A weekend low had been formed closer to the support at $5,800. The reversal on Monday saw the bulls retake the support above $6,200. More bullish action pushed BTC/USD above $6,400 but the price hit a wall at $6,500 early Wednesday.
Observing Bitcoin in the hour range, I can spot a short term falling wedge pattern whose breakout culminated in a rally during the American session (on Wednesday). The price rallied towards $7,000 but lost steam within a whisker of $6,800. According to an analyst on Twitter, “BTC took a short 6,642… SL 6,830 retesting horizontal resistance. 1hr RSI overbought. 1hr Stock high and ready to come down. This is banking on all this being a Short Squeeze.”
The breakout to $6,800 was mainly technical; following BTC step above the falling wedge pattern, the 50 SMA in the 1-hour range and the 100 SMA. At the time of writing, Bitcoin is teetering at $6,607 following a retreat from the weekly high at $6,771. This short-lived rally was not fundamentally supported which explains the immediate reversal. If the support at $6,500 gives in, there is a chance that Bitcoin could breakdown further to test $6,400 (100 SMA) before finding balance.
Spot rate: $6,643
Relative change: -20
Percentage: -0.30%
RSI: Retreats from the overbought
Trend: Bearish
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