Bitcoin has formed lower highs and higher lows on its weekly time frame to create a symmetrical triangle on the long-term chart. Price is testing the bottom of this formation and might be due for a bounce back to the top.
The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. This also lines up with the 200 SMA dynamic support to add to its strength as a floor.
RSI is heading lower to signal the presence of selling pressure, but the oscillator is already dipping into the oversold region to signal exhaustion. Stochastic is also moving south so price could follow suit, and this oscillator has more room to go before hitting the oversold region to reflect exhaustion. A return in bullish pressure could spur a bounce back to the triangle top around $9,000.
Bitcoin is moving in tandem with overall market sentiment these days as traders are dumping riskier holdings in general, including gold, while risk-off flows are in play. The COVID-19 outbreak is front and center when it comes to factors that are driving sentiment, and it looks like traders are also losing faith that officials can keep the situation contained.
Still, bitcoin has its halving of mining rewards to look forward to in May and this could potentially pare larger losses for the cryptocurrency. After all, previous instances have resulted to doubling or even tripling of value of the coin over the span of months or years.
Although several technical levels have been broken and there seems to be no end in sight to the ongoing crisis, buyers could keep defending the $5,000 key psychological barrier. A break lower, however, could signal that a deeper decline would follow.
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