Bitcoin has been consolidating inside a symmetrical triangle on the 4-hour time frame and was rejected on a test of resistance. Price is also trending higher inside a short-term ascending channel whose bottom appears to be currently holding as support.
If so, the price could make its way back up to the top of the triangle or even the top of the channel at $7,000. However, 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, support might be more likely to break than to hold.
In that case, Bitcoin could fall by the same height as the chart pattern, which spans around $6,000 to $8,200. Similarly, a break higher could be followed by a rally of the same size.
RSI is pointing down to suggest that sellers still have the upper hand and this could be the case for a while since the oscillator has plenty of room to fall before reaching oversold levels. Meanwhile, stochastic is also heading lower but is closing in on oversold territory to signal exhaustion among sellers and a possible return in bullish pressure.
Bitcoin previously got a boost from the SEC decision to open the comment period for the Bitcoin ETF application from VanEck/SolidX, leading many to speculate that an approval could be possible. After all, the regulator refrained from giving a complete rejection and appears open to input from the investing public.
Any indication that an approval might be in order could lead to speculative positioning as this would usher in stronger volumes from institutions and retail investors. Furthermore, it would represent a thumbs-up from the regulator and also set a precedent for other crypto-based securities looking to be regulated. Rejection, on the other hand, could prevent the much-anticipated rebound for Bitcoin from taking place this year.
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