Bitcoin has formed lower highs and higher lows to consolidate inside a symmetrical triangle pattern on its 1-hour chart. Price is currently testing the resistance and could be due for a move back to support next.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that resistance is more likely to hold than to break. However, the gap between the indicators is narrowing to reflect slower bearish momentum. A break past the triangle top could be followed by a rally that’s at least the same size as the formation.
Still, if the triangle top holds, bitcoin could slide back to the support around $6,000. Stronger selling pressure could spur a break lower and a drop that’s the same height as the triangle pattern. RSI is on the move down so price could follow suit while sellers have the upper hand. Similarly stochastic is turning lower after recently reaching the overbought zone, indicating that bearish momentum is building up.
Bitcoin appears to be regaining some of its safe-haven appeal, along with gold and other lower-yielding assets. Traders appear to have snubbed the stimulus efforts by governments and central banks, although the US government has announced some packages dedicated to helping ailing American businesses.
Keep in mind that bitcoin is also looking ahead to the halving mining rewards in May, so traders might be taking advantage of these lower prices to buy the altcoin at a bargain. Recall that previous halving instances have resulted to nearly twice as much value for the coin over the span of a few years or even months.
For now, market sentiment remains the main driver of price action for bitcoin as investors are glued to headlines related to the COVID-19 outbreak.
Images courtesy of TradingView
