Bitcoin has formed lower highs and lower lows to trade inside a descending channel on its 1-hour time frame. Price bounced off the resistance and looks ready to resume the slide to the downside targets marked by the Fib extension tool.
Price is already testing the 50% extension at the mid-channel area of interest and sustained selling pressure could take it down to the 61.8% extension at $6,800. This lines up with a longer-term former resistance level that may still contain some buy orders.
From there, a continued drop could bring bitcoin to the 78.6% extension at $6,700 or the full extension at the channel support around $6,600. A break below these levels could confirm that bitcoin is far from bottoming out.
The 100 SMA is safely below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to persist than to reverse. The short-term moving average is just above the top of the channel, adding an extra ceiling in the event of an upside break.
RSI is still pointing up, though, so buyers could still put up a fight. Similarly, stochastic is heading north so bitcoin might follow suit.
The lack of any major positive updates over the past couple of weeks has rendered bitcoin vulnerable to profit-taking and more sensitive to negative commentary. This has also prompted a lot of naysayers to come out and claim that the bubble is starting to burst.
Still, Wall Street bull Tom Lee noted that bitcoin has been able to reclaim its market share and that this is a positive sign. Fresh confirmation that Goldman Sachs is placing bets on the cryptocurrency industry could also be enough to remind traders that institutional funds are flowing in, likely keeping the industry supported in the longer run.
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