Bitcoin looks ready to resume the slide as it bounced off the area of interest or former support turned resistance around $8,000. Applying the Fibonacci extension tool shows the next potential downside targets.
The 38.2% level lines up with the swing low around $6,500 where bears could book some winnings. Stronger selling pressure could spur a break lower to the 50% extension that lines up with the $6,000 psychological mark or the 78.6% level at $5,000. The full extension is located at $4,081.93.
The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to pick up. Price has also fallen below the 100 SMA dynamic inflection point to confirm that selling pressure is still present.
RSI is pointing down to indicate that bearish momentum is in play, but the oscillator is closing in on the oversold region to reflect exhaustion. On the other hand, stochastic is turning higher to suggest that buyers have control, and the oscillator just crossed the center line to suggest that momentum might still pick up from here.
Bitcoin remains under weak footing after news broke out that the Chinese government could step up its efforts to crack down on cryptocurrency activity in the country. This doused the positive sentiment spurred from indications that they were open to exploring blockchain and bitcoin technology.
Apart from that, the return in risk-taking in general financial markets also drew liquidity out of cryptocurrency markets and onto traditional stocks and commodities as markets rebounded. Geopolitical risks seem to be fading, but there could still be risks stemming from escalating trade tensions between the US and China. Indications that a deal could be finalized soon could mean more downside for bitcoin.
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