Bitcoin direction uncertain as it trades near $6,700 level

CoinDesk analysis

A technical analysis of Bitcoin’s (BTC) price movements was released by Omkar Godpole at 11:21 UTC today on CoinDesAk.

Earlier analyses had indicated that Bitcoin was likely to break out of a period of low volatility through a sharp break up or down. Many thought that given the technical signals the direction could be down, However yesterday the price went up fairly high as indicated in a recent Digital Journal article.

Godpole notes that Bitcoin just missed a breakout as prices backed down from a six-day high of $6,826 today. BTC has consistently defended the $6,000 level over the last three months. This has convinced many investors including billionaire Novogratz that Bitcoin bottomed out around that level, the February low.

However, a bullish breakout is not yet confirmed. Their needs to be acceptance above the top edge of the three-month narrowing price range, presently located at $6,870. So far the price has yet to break through that level let alone find acceptance above it. When the CoinDesk article went to press BTC was trading at $6,645. This represents a rise of 2.5 percent over the last 24 hours.

Chart analysis

The weekly chart shows that around $6,000 the February low any BTC decline has stopped. This indicates that there are probably a dearth of sellers at that price. However, the price of BTC has been pushed down 70 percent over its record high last December near $20,000.

The daily chart shows a large narrowing price range, or pennant, over the last three months. A UTC close above the present $6,870 hurdle would confirm a bearish-to-bullish trend change. Any bullish move could be rapid as there has been a long period of range-bound trading and this often followed by a big jump in volatility according to technical theory.

Though the stacking order of the 50-day moving average (MA) below the 100-day MA which is also below the 200-day MA shows the path of least resistance is to the downside, price action always takes precedence over lagging indicators such as MAs. Biitcoin action yesterday was up in spite of the fact that down was the least resistance then as well.

CoinDesk outlook

Relying on his technical analyses Godpole predicts: “A pennant breakout, if confirmed, would validate the argument that cryptocurrency has carved out a long-term bottom around $6,000 and would open up upside toward May highs above $8,500. The outlook remains neutral while BTC is trapped inside the narrowing price range. A downside break of the pennant pattern will likely embolden the bears and allow re-test of the June low of $5,755.”

Present situation

Godpole usually uses prices on Bitfiniex for reference. CoinDesk uses an average of several exchanges for its numbers, so the two will often vary somewhat. According to CoinDesk figures, Bitcoin opened yesterday at $6,458 and reached a high of over $6,500 at $6,731. Its low was $6,434. It closed at $6,684 over two hundred dollars above its opening in spite of the fact that technical analysis showed a down movement had the least resistance. Today the high so far has been $6,793 with a low of $6,574 with no breaking through the $6,870 hurdle. However, the bears have little to cheer about either. We may see a more definite trend later today or tomorrow. At 20:06 today the price was $6,661. The present price of Bitcoin can be found here.

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