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article imageBitcoin back over $6,200 but with bearish signs

By Ken Hanly     Oct 12, 2018 in Technology
After a big drop early this morning below $6,200 for the rest of the day so far Bitcoin has recovered to well over that level as it appears to be gaining a bit of lost ground in spite of bearish signals.
CoinDesk analysis
Omkar Godpole released his usual analysis at 12:43 UTC today. Godpole claims that there is a prospect of a further deep drop in Bitcoin prices according to price-volume analysis.
Bitcoin has been trading basically sideways since September 22 before falling to a three-week low of $6,220 yesterday on Bitfinex confirming a range breakdown.
Technical indicators on the daily chart have also provided bearish signals, confirming a negative moving average crossover on the long duration charts. Godpole maintains that bears took control 24 hours ago opening the gates to drop down to the key support level of $6,000.
Three factors making the bearish case look stronger
First, BTC has breached a key support. Yesterday, there was a Bollinger band breakdown and the price also broke through the trendline drawn between the June 24 low and August 11 low. This is likely to encourage the bears as this trendline had repeatedly stopped any sell-off during the first half of September. It is now acting as a stiff resistance to the bulls as they try to recover.
Secondly, trading volumes are hitting multi-week highs. Yesterday, trading volumes hit a five-week high on Bitfinex. This happened across all exchanges as trading volume rose 36 percent to $5.18 billion. According to CoinMarketCap this is the highest volume since September 21. A higher volume on a drop is considered a strong negative indicator, an encouragement to the bears.
Finally, short positions are rising while long positions drop sharply.
The high volume was accompanied by a 10 percent drop in long positions and a 7.4 percent rise in short positions on Bitfinex,
This is another sign that there could be a deeper selloff in the future. It is clear that the path of least resistance is to the downside even though there has been a slight recovery of 0.9 percent over the last 24 hours. This is likely a result of oversold conditions shown by the relative strength index (RSI) on the hourly and 4-hour charts.
CoinDesk outlook
Base on his analysis Godpole's view is: "BTC's fall below $6,300 kick-started a bearish move toward $6,000 yesterday. The probability of a drop to $6,000 has increased in the last 24 hours as the range breakdown was backed by a pick-up in trading volumes, as well as a rise in shorts and a drop in longs. A UTC close above yesterday's high of $6,630 would invalidate the bearish view. "
Present situation
Bitcoin started off the day below $6,200 at $6,177 but has rebounded to a high so far of $6,264. The low has been down as far as $6,142. However, so far BTC is staying above the $6,000 level but there is no sign of a move high enough to invalidate the bearish view. Perhaps later in the day we will see another dip. At 16:30 UTC, Bitcoin was trading at $6,246 but there are still about eight hours left in the day. The present price of BTC can be found here. The appended video also discusses the stock market crash.
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