Bitcoin’s recent failure to break key price resistance has raised concerns among analysts who study price charts, leading to the risk of a deeper pullback. Despite its upswing, Bitcoin’s prices have recently stalled, and it has failed to crack resistance at $25,200, which was the same level that capped the August bounce.
Bearish Short-term Bias
According to Katie Stockton, founder and managing partner at Fairlead Strategies, “Bitcoin has been unable to break out above trading range resistance near $25.2K, resulting in a whipsaw lower for the daily MACD.” The Moving Average Convergence Divergence (MACD) histogram is an indicator used to gauge trend strength and trend changes, and with the MACD ‘sell’ signal, and room to oversold levels per the daily stochastics, Stockton predicts a bearish short-term bias.
Major averages have crossed bearish (TradingView/CoinDesk)
Bitcoin to Revisit $20K
Stockton expects Bitcoin to revisit $20,000 after brief stabilization around the 50-day simple moving average, which is currently at $22,567. Meanwhile, the stochastic indicator, used to gauge overbought and oversold conditions, is yet to fall below 30, implying room for price declines.
Weekly Chart Favors Deeper Pullback
Alex Kuptsikevich, senior market analyst at FxPro, agrees that Bitcoin’s weekly chart also favors a deeper pullback. “Technically, Bitcoin is selling off after touching its 200-week moving average. And due to the negative momentum at the end of the week, it has also fallen below the 50-week moving average,” he said in an email on Monday.
Death Cross a Bearish Development
Bitcoin has turned lower from the 200-week simple moving average (SMA) after facing rejection above the same for two consecutive weeks. The 50-week SMA has dropped below the 200-week SMA, producing what is known as the “death cross,” which is a bearish development.
The MACD indicator has recently turned negative in a sign of bearish shift in momentum. (TradingView CoinDesk)
Temporary Bull Breather
Despite the expected price decline, Kuptsikevich remains optimistic and sees it as a temporary bull breather. “A pullback in Bitcoin to $21.5K would remain a correction within a bull market, but a sharp drop below that level could force a reassessment of whether we are out of a bear market,” he said.
Source: CoinDesk
