Bitcoin has formed lower highs and higher lows on its daily time frame to create a symmetrical triangle consolidation pattern. Price has dropped back down to support, which appears to be defended by bulls buying on dips.
If buyers are strong enough, another test of the triangle top could be in the works. Stochastic is just staring to pull up from the oversold area after all, indicating that bullish pressure might be returning. RSI is also turning higher to show that buyers are regaining the upper hand and could push for a move to $6,600.
The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, support is more likely to break than to hold or resistance is more likely to hold than to break. Then again, the gap between the moving averages has narrowed to reflect slower selling pressure.
Bitcoin has had to deal with a mixed set of factors last week, but the primary driving factor appears to have been regulatory updates. For one, the IMF warned of cybersecurity risks related to crypto, urging regulators to keep their efforts up. This was followed by reports of the SEC cracking down on potentially fraudulent ICO activity, leading some to doubt that bitcoin ETF approval was possible.
It didn’t help that risk appetite had wild swings in the previous week, ultimately discouraging traders from putting funds in these higher-yielding assets. Lower volumes also played a role in exacerbating the selloff as the thin liquidity allowed even smaller positions to lead to big moves.
Looking ahead, risk sentiment and regulatory updates could continue to push bitcoin price around, although there are still a number of factors that could impact general financial markets.
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