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article imageBitcoin struggles to stay over the $6,000 level

By Ken Hanly     Aug 9, 2018 in Technology
Bitcoin appears to be recovering slightly today as it is trading well beyond the $6,000 level after approaching that level on Wednesday with a three-week low of $6,121 on Bitfinex exchange.
CoinDesk's analysis
A recent article by CoinDesk claims that bitcoin is likely to defend the support level of $6,000 over the short term as the sell-off appears overstretched according to technical data. On Wednesday, BTC's price had fallen for the third straight day. When the CoinDesk article went to press at 11:00 UTC the price was $6,320 down fully 24 percent from the July 24 high of $8,507.
About half of the drop witnessed over the last two weeks has happened within the last 48 hours. As mentioned in an earlier Digital Journal article the drop seems to have been precipitated by the decision of the US SEC to postpone a decision on granting an exchange traded fund (ETF) proposal. Other cryptocoins have fared even worse as investor's become risk adverse.
While there is not much of a chance a bullish situation will happen in the short term, on the other hand the bearish plunge seems to be running out of steam after a steep selloff during the last couple of weeks. The technical charts also show that the bitcoin market is nearing an oversold position. This could lead to a period of consolidation or even a minor corrective rally.
Chart analysis
The daily chart shows that the BTC price closed well below the ascending trendline on Wednesday which increases the odds that were will be a further sell-off. BTC also found acceptance below $6,344 a key level and this adds to the bearish outlook of the market.
A drop to the psychological support level of $6,000 cannot be ruled out but any bearish momentum is likely to fizzle out as the relative strength index (RSI) is almost at the oversold range below 30.00. Short duration charts are also indicating oversold conditions.
On the 4-hour chart the RSI fell below the 30.00 level into oversold territory and was at the lowest level since June 22 earlier today. It is at its most oversold condition in the last seven weeks. This also points to a consolidation period or even a brief rally. However, the signs are that this might not be sustainable.
The 50-candle MA has crossed the 200-candle MA from above indicating a bearish crossover. The stacking order of the 50-candle, below the 100-candle, below the 200-candle is a typical bearish signal. Also the 5-day and 10-day MAs are also downward sloping another bearish indication.
CoinDesk outlook based on its analysis
CoinDesk's view of the future is: "The bearish momentum in BTC could wane in the next 24 hours, allowing the cryptocurrency to defend the immediate support of $6,000. A corrective rally cannot be ruled out but is seen running out of steam around the downward sloping 5-day and 10-day MAs, currently located at $6,660 and $7,000, respectively. A daily close (as per UTC) above the 10-day MA would weaken the bearish pressure. Acceptance below $6,000 would shift risk in favor of a drop to $5,755 (June lows) and could be followed by a "V-shaped" recovery to current levels as the indicators are flashing oversold conditions."
Present situation
BTC opened the day at $6,280 well above the $6,000 level. The high so far has been $6,535 and the low $6,204. At 20:43 UTC the bitcoin price was $6,498 not far off its daily high so far. It is up over 3.6 percent on the day and more than two hundred dollars above its opening. It looks as if there will be a minor rally as CoinDesk thought was possible. It appears unlikely there will be a bullish close around $7,000. However, a bearish scenario does not seem likely either. But there are still several hours in the day to go. The present price of bitcoin can be found here.
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