Bitcoin’s (BTC) price dropped to two-week lows earlier today and could extend the decline to key support near $6,100, technical charts indicate.
The leading cryptocurrency was teasing a bullish move 24-hours ago, having carved out a lower high of $6,270 along the support of the trendline connecting the Oct. 11 low and Oct. 31 low.
The defense of the key trendline support was also backed by a bullish divergence of the MACD (moving average convergence divergence) histogram.
Even so, BTC failed to pick up a bid, possibly due to sharp losses in US equities, and fell back to $6,252 in the Asian session today – the lowest level since Oct 31. BTC was last seen changing hands at $6,285 on Coinbase, representing a 0.80 percent drop on the day.
BTC has breached the ascending trendline support on the 4-hour chart, adding credence to the lower highs and lower lows pattern created from the Nov. 7 high of $6,540.
The relative strength index of 32 is also biased toward the bears. So, a deeper drop could be in the offing. The bearish setup, however, would be invalidated if prices cut through the descending trendline, representing lower highs pattern.
Over on the 3-day chart – on which each candlestick represents price action over a 72-hour period – BTC witnessed a sideways breach of the triangle pattern at the end of October. So far, however, the bulls have not been able to capitalize on the breakout.
BTC also charted a “gravestone doji” – a bearish reversal pattern – earlier this month, signaling that another lower high has been made at $6,540. More importantly, the follow-through has been weak, as indicated by the drop to two-week lows.
Hence, prices risk falling to support of the trendline connecting the June 24 low and Aug. 14 low, currently at $6,113.
- The drop to two-week lows has likely opened the doors for a test of the trendline support at $6,113. A 3-day close below that level would strengthen the bear grip on BTC, allowing for a drop to June lows below $5,800.
- On the higher side, the weekly high of $6,540 is the level to beat for the bulls. That level could be put to test if prices violate the lower highs pattern seen in the 4-hour chart with a move above $6,383.
Disclosure: The author holds no cryptocurrency assets at the time of writing.