Bitcoin’s drop to three-week lows today has likely kick-started a bearish move towards the major support at $6,000, technical charts indicate.
The leading cryptocurrency fell to $6,252 at 7:15 UTC on Bitfinex – the lowest level since Sept. 19 – and was last seen trading at $6,300, representing a 5-percent drop on a 24-hour basis.
The failure to capitalize on Monday’s move above the crucial 10-week exponential moving average (EMA) resistance of $6,998, despite the upside break of a key falling trendline, ended up emboldening the bears, as expected.
More importantly, the sell-off witnessed in the last few hours has put an end to a prolonged period of lateral trading. The technical indicators have rolled over in favor of the bears, adding credence to the bearish setup on the long duration charts.
Further, the big drop in the equity markets this morning may not bode well for BTC, as the cryptocurrency is still being treated as a risk asset.
As a result, the cryptocurrency is eyeing a drop toward $6,000. Here are four reasons why that is looking likely:
Bollinger band breakdown
The Bollinger bands (standard deviation of +2, -2 on the 20-day moving average) on the daily chart have been moving in a sideways manner since Sept. 22, signaling a lack of clear directional bias.
A prolonged period of low volatility usually makes way for a big move in either direction. In BTC’s case, that move looks to have already started to the downside, with a breach of the lower band, and may move further towards $6,000.
Indicators are biased toward the bears
The relative strength index (RSI) has breached the rising trendline and fell into the bearish territory
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