Bitcoin price is in the middle of a correction from its selloff and a return in bearish pressure could allow the downtrend to resume soon.
Bitcoin Price Key Highlights
Bitcoin price is trending lower, moving inside a descending channel connecting the highs and lows since mid-July.
Price just bounced off support around $1850 and is pulling back to the resistance.
Applying the Fibonacci retracement tool on the swing high and low shows the potential upside inflection points.
Bitcoin price is in the middle of a correction from its selloff and a return in bearish pressure could allow the downtrend to resume soon.
Technical Indicators Signals
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside. In addition, the moving averages are close to the channel resistance around $2350 to add an extra layer of defense. A break past this area could signal that bulls are back in the game.
Stochastic is on the move up so there may be some buying pressure left, but the oscillator is already dipping into the overbought zone to signal rally exhaustion. In that case, bears could regain control of bitcoin price action soon once the oscillator turns lower.
RSI is also on the move up and has room to go before hitting overbought levels. This means that the correction could stay in play for a bit longer before profit-taking among buyers occurs. Once that happens, a drop back to the swing low or the channel support might be in order.
Market Factors
A bit of risk aversion returned to the financial markets on Monday ahead of the US earnings season and another round of Brexit talks. The ECB and BOJ are also scheduled to announce their monetary policy decisions this week so traders are feeling uneasy. Next week has the July FOMC decision so dollar movements could see volatility as well.
If this risk-off environment keeps up, bitcoin price could be poised for more gains again as traders search for higher returns in non-traditional markets. On the other hand, a return in risk-taking could draw investors away from cryptocurrencies and onto traditional assets like stocks and commodities.
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