Bitcoin Slides Lower: Breakout Still Loading?

The Bitcoin price is continuing to slide lower. Currently sitting on the $78K horizontal support level, could the price be on the way down to $76K? Momentum indicators suggest that a breakout might be on the way. Which of these scenarios is likely to happen?

$BTC price hits channel bottom

Source: TradingView

The short-term time frame shows us that the $BTC price has come back all the way to the bottom of the parallel rising channel. The price is following a small descending trendline, just like it did previously after it had reached the top of the channel. If the same thing is to happen, once/if the price breaks up through the small trendline it could perhaps rise just as quickly to the upside.

The fact that the $BTC price has reached the bottom of the channel, and that the current candle has also wicked down to retest the $76,830 horizontal support level, is actually quite bullish. Given that all the short to medium term momentum indicators have reset, out as far as the daily time frame, momentum could be about to swing back in favour of the bulls.

That said, it would be better to remain cautious. Bond yields are rising across the world and this is having a deleterious effect on gold, stocks and also the crypto market. If this 4-hour candle closes beneath the channel, there could be a fair bit more downside to come.

Probabilities favour the bulls… just!

Source: TradingView

Analysing the $BTC price in the daily time frame one has to sympathise with the bulls. If only the price action at the top of those towering green candles was tilted slightly down. Then we would be looking at a classic bull flag, and it would probably just be a matter of time before the price exploded through the top of the flag and went a lot higher.

As things stand, the price action in the flag has an up-tilt - far from satisfactory. However, this is probably still a consolidation period for the price, and given the size of the rally to get here, the probability of eventual upside is slightly greater than to the downside.

The $BTC price is at a key level now, as mentioned above. If the price can hold the bottom of the channel, a next up-leg to the top of the channel and the crucial overhead resistance could be loading.

Will the bears seize their chance?

Source: TradingView

What a difference a day makes. Wednesday’s price action looked quite good, as $BTC was for all intents and purposes heading back to the top of its channel with a possible breakout to follow. Here we are on Thursday, and the price is at the bottom of the channel, and looks to be rejecting from the 50-day SMA instead of closing above it.

As already mentioned, a candle closing below the small ascending channel would be likely to initiate a downtrend to at least $73K, and even to $69K. 

At the bottom of the chart, the Stochastic RSI indicator lines are getting into position for a potential cross-down. The price action on Friday and over the weekend is going to be critical. The bulls need to hold this ground, while the bears will be looking to force the price out of the bottom of the channel. Who will be the victor come Monday morning?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.