Bitcoin Price Faces Drop to Support Levels Below $10K
- Bitcoin risks falling below $10,000 this week, having confirmed a high-volume bearish reversal on the daily chart on Friday.
- A break below $10,000 would expose key support levels lined up at $9,755 and $9,320.
- The bearish case would weaken if the cryptocurrency rises above $10,350 today, confirming a wedge breakout on the hourly chart.
- A UTC close above $10,956 (Aug. 20 high as per Bitstamp data) is needed to revive the bullish outlook.
Bitcoin (BTC) is losing altitude and may slide further toward $9,750 this week unless prices invalidate a bearish technical setup with a move above $10,350 in the next few hours.
The top cryptocurrency fell to $10,060 at 08:10 UTC, the lowest level since Sept. 2, according to Bitstamp data.
BTC hit the one-week low two days after facing strong rejection near key resistance. On Friday, the cryptocurrency fell sharply to $10,200 with strong volumes shortly after facing rejection near $10,956 – a bearish lower high created on Aug. 20.
Friday’s drop marked a victory for the bears in an ongoing tug of war with the bulls represented by Wednesday’s “spinning top” candle.
Essentially, the market turned bearish with Friday’s drop and the negative follow through seen today has further strengthened the case for retest of key support levels lined up below $10,000.
Even so, sellers need to observe caution, as the pullback from highs near $10,956 has taken the shape of a bullish reversal on the intraday charts.
As of writing, BTC is changing hands at $10,240 on Bitstamp, representing a 3 percent drop on a 24-hour basis.
Daily and hourly charts
BTC fell 4 percent on Friday (above left), engulfing the price action seen in the preceding three days.
More importantly, prices closed (UTC) well below $10,378 on Friday, validating the seller exhaustion signaled by Wednesday’s spinning top candle and Thursday’s doji candle.
In the following two days, prices traded in the range of $10,200–$10,400 before falling to lows below $10,100 earlier today, marking a continuation of Friday’s sell-off.
Now, the path of least resistance is to the downside, according to the daily chart. Prices could soon challenge support at $9,755 – the low of the Aug. 22 doji candle. A violation there would expose the recent low of $9,320 (Aug. 29 low).
The bearish case, however, would weaken if prices break higher from the falling wedge pattern seen on the hourly chart (above right). As of writing, the upper edge of the falling wedge is located at $10,350.
A falling wedge comprises converging trendlines connecting lower highs and lower lows. The converging nature of the trendlines indicates the bearish momentum is running out of steam. Hence, a breakout is widely taken as a sign of bullish reversal.
However, in this case, the wedge breakout, if confirmed, would only weaken the prospects of a slide below $10,000. The outlook would turn bullish only if prices print a UTC close above $10,956 (Aug. 20 high).
That would invalidate the bearish lower-highs setup on the daily chart. Note that longer time frame charts take precedence over the hourly and other intraday charts, as per technical analysis theory.
Disclosure: The author holds no cryptocurrency assets at the time of writing.