Bitcoin has formed lower highs and found support around the $6,000 level, creating a descending triangle on its daily chart. Price is back down to support after recently getting rejected at the resistance and tumbling sharply.
A bounce off this floor could take Bitcoin back up to the triangle top around the $7,000 mark. However, the 100 SMA could also serve as a nearby resistance level. It is below the longer-term 200 SMA, after all, indicating that the path of least resistance is to the downside. In other words, support is more likely to break than to hold.
RSI has some room to head south before indicating oversold conditions, which means that sellers could still have some energy left for another push lower. Stochastic is already indicating oversold conditions or that bears are feeling exhausted and might be ready to let buyers take over soon.
Although Bitcoin has been weighed down in terms of price, its market dominance keeps rising and leaving its rival altcoins eating dust. Volumes, however, were also considerably lower on a light trading day. On Monday, only1,965 contracts changed hands on the CME Group exchange, lower by 28.7% from Friday and down 72.2% from one month ago.
It would take a positive catalyst to trigger another bounce off this level and sustain the climb. Still, it’s worth remembering that buyers have been defending this level since the start of the year and could continue to do so. The lower highs are a bit worrisome since this indicates gradually increasing bearish pressure.
A break below support could set off a drop that’s roughly the same height as the chart formation, effectively bringing Bitcoin down to around $2,000 or lower. Many are hopeful that a positive ruling by the SEC on Bitcoin ETF applications could trigger a strong rebound before the year closes.