Bitcoin broke below the bottom of its long-term descending triangle and could be setting its sights on the next area of interest.
Bitcoin chalked up yet another day of major losses as bearish momentum gained traction after the wedge and triangle breakdown. Price might be aiming for the bottom of the long-term descending channel from here.
This potential floor lines up with a long-term area of interest or former resistance turned support seen on the weekly chart. However, note that the triangle pattern is around $5,000 tall so the resulting breakdown could last by the same height, possibly taking bitcoin all the way down to the $1,000 mark.
Still, the 100 SMA is above the longer-term 200 SMA on this weekly time frame to signal that the path of least resistance is to the upside. In other words, there’s still a chance for long-term support areas to hold. Bulls might still be inclined to buy on dips after all, but it could take longer before the recent slide is undone.
Stochastic has been hovering around the oversold region for quite some time, indicating that bears are exhausted and that it’s time for bulls to take over. However, the oscillator has yet to pull higher in order to confirm that bullish momentum is picking up. RSI has also dipped into the oversold region to signal that sellers must be tired.
There seems to be no stopping the slide in the crpyto markets as bearish forecasts continue to pile in. Even the expected pickup in institutional investments early next year is looking like a long shot as investors may be discouraged by this recent slump.
FUD has been the prevailing sentiment in the markets so it would take a significant catalyst to trigger and sustain a big bounce. It doesn’t help that risk aversion is in play in the general financial markets while stock markets tumble and commodities take hits. Then again, historical price action has shown several instances wherein cryptocurrencies became the preferred “safe-haven” in extreme cases of risk-off flows.