$6,400 Beckons As Bitcoin Forms A Choppy Rectangle Pattern – BitMEX Margin Trading
October 21st, 2019
Bitcoin traders are supposed to be exercising the utmost caution due to the current trend. Besides, market volatility is back to the roof. The four-hour chart shows Bitcoin price trading in a newly formed rectangle pattern. According to jacobcanfield, an analyst on Tradingview:
“The Rectangle is a clearly defined level of support and resistance that acts as a ‘pause’ or ‘congestion’ in the middle of a trend. It is mostly seen as a continuation patterns by classic technical analysts and traders, but can be a reversal depending on volume flow and a breakout from the range with the top of resistance flipping as support.”
XBT/USD 4-hour chart
In the event the rectangle support is ruptured, Bitcoin is likely to disintegrate to $6,400 (measured move). Moreover, $6,400 is remembered as a very viable support area during the downtrend in 2018. The region also provided an anchor when Bitcoin briefly dived in May this year.
Meanwhile, Bitcoin is trading above $8,200 after recovering from the support at $7,800. The recovery initially stepped above the 50 Moving Average (MA) after gaining traction above $8,000. While the move to $8,300 was majestic, the trend failed to make headway towards $8,400.
For now, we could say Bitcoin is in a bullish range between $8,200 support and $8,300 resistance. However, a possible death cross could boost the above rectangle scenario. A death cross occurs when the 50 SMA crosses below the 100 MA.
The Moving Average Convergence Divergence (MACD) shows that the momentum is in the favor of the bulls. A positive divergence means that buyers will continue to increase their entries in the near term.
XBT/USD Key Technical Indicators
Spot rate: $8,242
Relative change: 6.3
Support: $8,200 and $7,800.
Resistance: $8,300, $8,600 and $8,800.