BTCUSD finally made a strong breakout of its consolidation pattern or symmetrical triangle formation. Price broke to the downside, signaling that sellers are getting the upper hand that further losses are likely.
The chart pattern is approximately $100 in height so the resulting breakdown could last by the same amount. The moving averages are still oscillating but it’s likely the 100 SMA will make a downward crossover after this sharp break lower. These indicators are around the top of the triangle so these could hold as dynamic resistance in the event of a pullback.
Stochastic is already indicating oversold conditions so buyers might be ready to regain control. Similarly RSI is in the oversold area, which means that sellers might need to take a break soon.
A pullback could find resistance at the $650 broken triangle support or at the resistance at $660. A break past that area could show that bullish momentum is back in place and that the longer-term uptrend has a chance to resume.
Data from the US economy came in much weaker than expected on Friday, leading traders to flock to safe-haven currencies. Although the Greenback was mostly weaker against its rivals in the forex arena, the currency was able to reign supreme against riskier assets like bitcoin.
That’s because fears of a global economic slowdown have once again popped up, leading traders to dump their riskier holdings in pursuit of low-risk assets. Further declines in bitcoin could lead to a drop to the $600 level then onto the $550 mark.
On the other hand, a return in risk appetite stemming from this week’s top-tier events namely the BOE decision and RBA statement could lead to a return in bitcoin strength. Still, with the strength of this breakdown, it’s likely that more bears will join the action later on in the week.