Thursday's Market Minute: Bitcoin Busts After False Breakout
Bitcoin futures gapped down -9.4% to start the trading week, quashing hopes for more upward movement after the previous week’s fresh all-time highs. Price action looked as though it could have been promising for bulls, breaching the upper boundary of a rising wedge pattern (which is typically bearish) a bit above the 60,000 level.
However, the king of cryptocurrency has run very far, very fast; /BTC reached over 65,000 last week, which means it more than doubled since the beginning of 2021 before giving back some ground. It’s still up about 80% on the year as of yesterday’s close, so this stumble is not exactly shocking as the sharper and steeper the move, the less sustainable it is. In terms of technicals, the contract stabilized near the 50-day Simple Moving Average, currently near 55,080, but once again slipped lower during the evening hours. Momentum has been dragging for much of 2021, with the RSI showing bearish divergence as it trended downward while price continued to make new highs.
To the downside, watch for support at the 63-day Exponential Moving Average near 50,810, and the confluence of the yearly Linear Regression line and the previous lows from March near 50,360. The nearest upside level to watch is the Linear Regression 50% Channel’s upper boundary near 57,730, with the 21-day EMA just below.
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