Bitcoin broke below its short-term rising channel to signal that bearish action is back in play. However, the longer-term ascending channel remains very much intact even as technical indicators are giving mixed signals.
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. Price is testing the 100 SMA dynamic inflection point, which might still provide some support.
If so, Bitcoin could revisit the mid-channel area of interest and break higher to indicate a continuation of the longer-term climb to the channel top at $6,800. Stochastic is still heading lower but is nearing oversold levels to reflect exhaustion among sellers. RSI is also heading lower but has more room to cover before hitting the oversold region, which suggests that bearish pressure could stay in play for a bit longer.
Bitcoin has been on solid footing for the most part of the week, although it’s understandable that profit-taking is happening at this point. For one, the FOMC decision reaffirmed December rate hike expectations and propped the dollar higher across the board. The prospect of higher borrowing costs also dampened investor appetite for riskier assets like stocks and cryptocurrencies.
Meanwhile, the update that the SEC has ended its public comment period on Bitcoin ETF applications also spread some jitters among investors. After all, this suggests that a decision might be due soon, and a rejection could usher in more short-term declines for the cryptocurrency.
Still, bitcoin has a lot to look forward to as highlighted in the Morgan Stanley report that had a bullish outlook for the coming year on account of more institutional inflows. Although the report still mentioned some reservations when it comes to regulation and energy usage, it was overall bullish on the cryptocurrency.
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