Bitcoin has formed lower highs and slightly lower lows to create a falling wedge pattern visible on the 1-hour chart. Price just bounced off the bottom and might be due for a move back to the top.
However, resistance might still hold around $6,500 as the 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. Also, the 100 SMA dynamic inflection point is close to the wedge top to add to its strength as resistance.
Then again, it’s also worth noting that the gap between the moving averages is narrowing to reflect weakening selling pressure. This could also be indicative of a looming bullish crossover, which might spur an upside break. In that case, Bitcoin could climb by the same height as the formation, which spans $6,450 to $6,750.
Stochastic is also turning higher without even hitting oversold levels, suggesting that buyers are eager to return. That spike off the wedge bottom reveals that bulls are keen on defending support areas. RSI also looks ready to turn higher even though it has some ground to cover before hitting oversold levels.
Investors appear to be booking profits quickly off recent rallies on account of risk-off flows in financial markets. Stocks and commodities were hit hard, discouraging traders from putting funds in riskier holdings like Bitcoin and other cryptocurrencies.
Still, the industry could have a lot to look forward to, including the launch of ICE Bakkt Bitcoin futures in December. This could lead to an influx of funds from both retail and institutional investors, keeping volumes and price supported. Also, the institutional platform by Fidelity might bring in more institutional investment by early next year, which might also be positive for Bitcoin.
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