- Bitcoin stares into a bottomless pit, especially if the pennant pattern support is broken.
- BTC/USD path of least resistance remains downward even after losing over $2,000 in two days.
The flagship cryptocurrency, Bitcoin gave up the fight to secure support above $11,000 on Thursday, leading to a spiral to levels marginally below $10,000. The losses came as an extension of a bearish leg commenced earlier in the week when the largest cryptocurrency failed to sustain gains above $12,000. As discussed on Thursday, Bitcoin had recovered from the initial dip to $11,155 but the bulls could not rise above the seller congestion at $11,500.
An increase in selling pressure across the market forced Bitcoin down a painful path and through various tentative supports at $11,000, $10,400 and $10,200. BTC explored the area slightly below $10,000 before a recovery ensued.
At the time of writing, Bitcoin is teetering at $10,248. There have been instances when BTC has exchanged hands above $10,300 sustaining the bullish price action is an uphill task. As it stands, the path of least resistance is still downwards. A glance at the daily chart shows the formation of a bearish pennant pattern. Chart patterns of this nature usually signal the resumption of the previous trend (in this case BTC’s downtrend to $3,800).
In other words, if the pennant support caves in, even $10,000 would not manage to hold as support. Bitcoin is likely to fall to $8,000 after taking a pit stop at the support highlighted by the 200-day SMA.
Looking at the Relative Strength Index (RSI) in the daily range, Bitcoin is not done with the downside. Despite the drop suffered the RSI is not yet oversold. This means that there is still room that could be explored by the bears. Moreover, the Moving Average Convergence Divergence (MACD) puts emphasis on the downtrend.
On the upside, recovery will not come easy. First, support will have to be sort for above $10,300. The other seller congestion zone to keep in mind include $11,000, the 50-day SMA at $11,121, $11,600, $11,800 and the ultimate hurdle at $12,000.