The price of bitcoin just collapsed down through its long-standing support above $9,000 to almost $8,500.
At the time of this writing, the market-leading cryptocurrency is trading around $8,600 — but the extremely volatile nature of this move could have the price affected at print time.
The Descending Triangle Proves Its Bearishness
Many technical analysts have been drawing a descending triangle for months now, which — per classical technical analysis theory — is a bearish pattern.
Though bitcoin managed to put in some slightly-higher highs throughout the pattern — which had some analysts claiming the price of BTC was trading, rather, in a symmetrical triangle — the cryptocurrency market leader has broken down through any support it had in convincing fashion.
Those analysts that had been claiming that bitcoin was trading inside of a descending triangle have largely claimed that $8,500 would be the next major level of support — spurred on by intense buying interest and speculation.
Indeed, this belief has (thus far) proven to be accurate, with the price at Bitstamp almost perfectly hitting $8,500. On other exchanges, the bitcoin price didn’t quite make it that low.
Fibonacci Levels Worth Watching
At the time of this writing, bitcoin is holding on by a thread to its last level of support around $8,500.
Should this level not hold, the next significant level where one may speculate on a bitcoin bounce would be in the vicinity of $7,236. Some analysts have looked at this level as a bit of an overshoot and expect that — should the price of BTC drop that far — it would wick back up rather quickly.
Analysts warn that a drop below $7,000 could trigger a devastating look-out-below situation for bitcoin, taking the market leader’s price all the way back down to $5,430.
Ribbon of Resistance
It stands to reason that what goes down must come up, as bitcoin — volatile as it is — never moves in a straight line.
If you are looking for where a potential upwards retracement might meet resistance, the four-hour exponential moving average (EMA) ribbon has a solid history of acting as resistance or support — particularly on the bitcoin CME futures chart.
Source: Adam Scott - CCN