Bitcoin stayed safely inside its descending channel pattern on resurfacing risk-off flows and negative commentary. Price is starting to trade below the mid-channel area of interest and previous lows, aiming for the next Fibonacci extension levels.
Price is currently hanging around the 50% extension level at $7,900 and might be due for a move to the 61.8% extension at $7,724. The 78.6% extension is located near the channel support at $7,500 and stronger bearish momentum could take bitcoin down to the full extension at $7,153.4.
The 100 SMA made a brief upward crossover but looks ready to resume its place below the 200 SMA to signal that the path of least resistance is still to the downside. This means that the selloff is more likely to carry on than to reverse. The moving averages are also around the channel top to add to its strength as a ceiling.
RSI is pointing down but dipping into oversold territory to reflect exhaustion among sellers. However, this oscillator has yet to turn higher to signal a return in buying pressure. Similarly, stochastic is on the move down but could be due to pull up from the oversold region soon.
FOMC official Kashkari called the cryptocurrency industry a farce, saying:
“It’s a clever idea that some people came up with, but now it’s being taken to ridiculous extremes. The barrier to entry to creating a new cryptocurrency is zero.”
However, he did say that it could prove to be a shakeout and that a handful could still survive later on. Still, the lack of other positive developments in the industry has rendered bitcoin and its peers more vulnerable to downbeat comments like these.
It doesn’t help that risk aversion has returned on resurfacing geopolitical tensions, with Trump slamming the trade talks with China and suggesting that there’s a chance the meeting with North Korean leader Kim Jong-Un might not push through. The FOMC minutes are due next and could bring dollar volatility.