Bitcoin Price Faces Drop to $6.1K After Range Breakdown

Bitcoin 10 30 2018 LearnCrypto Powered By Wyckoff SMI 2022

Bitcoin’s (BTC) downside break of the recent narrow trading range may have opened the doors for a drop to key support at $6,100, technical charts indicate.

The leading cryptocurrency, which was sidelined above $6,400 for 10 days straight, fell to two-week lows near $6,200 yesterday, confirming a range breakdown.

Essentially, the bears have come out victorious in a tug of war with the bulls. As a result, risks are skewed to the downside. More importantly, a prolonged period of extremely low volatility ended with a sell-off yesterday, hence, the ensuing bearish move could be a big one.

Still, the bears are cautioned against being too aggressive, as the bounce from the 21-month exponential moving average (EMA) of $6,109 cannot be ruled out. The EMA has acted as a strong support since June. Further, the trendline connecting June lows and August lows is lined up at $6094.

To cut the long story short, BTC’s drop to two-week lows is a bearish development, but it’s close proximity to strong support levels calls for caution.

As of writing, BTC is changing hands at $6,250 on Coinbase, representing a 1.8 percent drop on a 24-hour basis.

Daily chart

BTCUSD Coinbase LearnCrypto Powered By Wyckoff SMI 2022

As seen in the above chart, the 5-day and 10-day EMAs have rolled over in favor of the bears following yesterday’s range breakdown.

The indicators are also biased toward the bears. For instance, the MACD has produced a bearish crossover (red bar below zero). Both relative strength index (RSI) and the stochastic are reporting bearish conditions below 50.00.

Monthly chart

BTCUSD monthly chart LearnCrypto Powered By Wyckoff SMI 2022

Over on the monthly chart, the sell-off from the record high of $20,000 seems to have ended around the 21-month EMA in the last four months.

So far, however, the bulls have failed to produce a meaningful bounce, despite the repeated bear failure to beat the EMA support.

The bear market would resume if the cryptocurrency closes below the 21-month EMA tomorrow (monthly close).

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  • The range breakdown could yield a drop to major supports lined up at $6,100.
  • A UTC close today below the trendline support of $6,094 would bolster the already bearish setup and boost the prospects of a monthly close (tomorrow) below the 21-month EMA.
  • A UTC close above the 10-day EMA of $6,355 would weaken the bearish pressure.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Water drop image via Shutterstock; charts by Trading View 

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