Bitcoin has slumped 3 percent a day after the short-covering fueled rally ran out of steam. The cryptocurrency which had hit a fresh 2-month low of $221.11 raced to hit an intraday high of $237.66 as a big chunk of short positions unwound near the important floor of $220.
Bitcoin is now trading at $228.63.
Technically, Bitcoin is grossly oversold considering the daily charts but, if we take a bigger view and study weekly charts instead, we get a very different picture.
Below are the technical observations made from studying the weekly BTC-USD price chart.
Bitcoin Chart Structure – A look at the weekly chart above clearly says that Bitcoin has come to its crucial support – a trendline drawn from connecting the weekly closing lows of 2015. Bitcoin has earlier taken support from this line at least twice, and the market participants are closely watching for negative surprises this time.
Although there is a slight sense of complacency in the Bitcoin market that the support would not get violated, it cannot be entirely ruled out.
Moving Average Convergence