- Bitcoin plunges to $7,300 after breaking the rectangle pattern support.
- Bitcoin recovery remains lethargic; characterized by shrinking volatility and low volume.
Bitcoin was mauled mercilessly during the European session on Wednesday. The disintegration continued through the Asian session. Moreover, the bears are still in control on Tuesday as the charts remain in the red.
In my previous analysis this week I explored the formation of a rectangle pattern. While the pattern is not common, its formation presents two scenarios. The first, a correction above the resistance coupled with a positive technical picture culminates in incredible gains. The second is the exact opposite of the first and is the movement Bitcoin was forced to deal with yesterday.
The demoralized bulls on failing to stay above $8,000, left the door wide open for the sniveling bears. The momentum put immense pressure on $7,800 and $7,700 support areas. The two zones gave in to declines further boosting the downside movement to $7,300.
Bitcoin futures contract on BitMEX is currently exchanging hands at $7,430 following a shallow and short-lived recovery. The Relative Strength Index (RSI) at 21.93 is working hard to pull above 30. However, the bears remain in control despite the extremely oversold conditions.
The lethargic recovery is characterized by low volume shrinking volatility. $7,400 is coming out as key support but extended declines are likely to find support at $7,300 (yesterday’s support). As long as Bitcoin is trading under $7,500, there is a high chance that the downside is not over and $6,400 (significant support in (2018) is the next target.
XBT/USD Key Technical Levels
Spot rate: $7,419
Relative change: -54
Percentage change: 0.7%
RSI: Oversold conditions
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