Bitcoin appears to have broken down from its falling wedge consolidation to signal that a steeper drop is underway. However, there are still a couple of potential support areas where buyers might be waiting.
Price is currently testing one of these now at the $4,800 area that lines up with a former resistance back in September 2018. Stochastic is closing in on oversold territory but does have some room to head further south, so there may still be some selling pressure left. In that case, Bitcoin could make its way down to the next long-term floor.
This might be all the way down to the $3,000 area, which is a previous resistance turned support level. The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. However, the gap between the moving averages is narrowing slightly to reflect slowing bearish pressure.
Volume remains elevated so there could be potential for big moves. Liquidity is expected to be thinner in the days ahead as most traders will be out for the Thanksgiving holidays, which might also mean high potential for volatility even on minor market updates.
Traders are blaming the uncertainty surrounding the Bitcoin Cash hard fork for the recent slump, but the SEC announcement on ICO operators violating securities laws may have also contributed to the move late in the week. After all, FUD has been in play and has been exacerbating the declines, with more analysts pointing out that it would take much longer before bitcoin recovers from this drop.
With that, it’s understandable that investors are taking money off the table and may be feeling discouraged from putting in more funds despite more inflows expected early next year.
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