CoinDesk analysis
In a recent article released at 13:03 UTC August 30 CoinDesk claims that bitcoin (BTC) bulls need to defend the key support at $6,905 in order to avoid the invalidation of the short-term bullish outlook technical charts indicate. Bitcoin’s price hit a high on Wednesday of $7,159. 24 hours later it is trading at around $6,920 on Bitfinex a drop of two percent within the period.
The drop is not too surprising as the gain of 21 percent during the last two week looked to be overstretched yesterday. The bull case could further weaken should the price find acceptance below the 100-day moving average (MA) that is now $6,905.
Chart analysis
The price of BTC created what is called a “spinning top candle” yesterday. This can often indicate indecision before a reversal of direction but is used with other technical indicators. However, given the 21 percent rally this could signal a reversal in favor of the bears.
A close below the $6,905 mark would validate that spinning top candle and shift the risk in favor of a downside break of the the rising wedge pattern. However, the price closed at $6,982 which though below the $7,000 level is above the 100-day moving average.
If there was price acceptance below the wedge support this would confirm the bullish-to-bearish change. It would show the rally from the low some time ago of $5,859 has run out of steam and the downtrend from the July high of $8,507 is starting again. if this happens the BTC could revisit recent lows that were below $6,000. The bulls need to defend the $6,905 level or as the short duration charts indicate there is a stronger risk of more losses.
The 4-hour chart shows that BTC has breached the rising trendline a move favoring the bears. The bearish trend may push the price down to the ascending 50-candle MA that is currently at $6,735.
The CoinDesk outlook
Based on the technical analysis, the CoinDesk view is: “A UTC close below $6,905 would confirm a spinning top bearish reversal and strengthen the odds of a downside break of the rising wedge pattern. A rising wedge breakdown would signal a resumption of the sell-off from the July high of $8,507 and could yield a drop to $6,000 (February low). A close today above the 100-day MA would keep the bulls in the game and allow a sustained move above $7,200 in the next couple of days.
Present situation
The close today was above the 100-day moving average of $6,905. The open on August 31 was $6,982 as mentioned earlier. However the open price is also the high so far with the low being $6,930 still above the 100-day moving average. At 03:03 into the new day the price was $6,946 somewhat off the low. It remains to be seen what will happen in the next 21 hours but bitcoin could very well break through the $7,000 barrier again. The present price of BTC can be found here,
