Bitcoin's price remains in a tight range below $6,500 despite the breach of key price hurdle.
Stepping back, the leading cryptocurrency cleared the resistance of the trendline drawn between the July 25 high and Sept. 4 high on Oct. 10.
So far, however, the bullish breakout has failed to put a bid under BTC, leaving it directionless in a narrow range of $6,476–$6,376. At press time, it is changing hands at $6,395 on Coinbase.
The US stock markets fell sharply yesterday triggering a flight to safety across the globe. The heightened risk aversion, as represented by the 3 percent drop in the S&P 500, is bad news for bitcoin as the cryptocurrency is still being treated as a risky asset. Further, the blue-chip index has been leading the bitcoin market by 12 hours or more since last few weeks.
Hence, a range breakdown in BTC cannot be ruled out. However, if the cryptocurrency continues to show resilience in the next few hours, then the prospects of a range breakout would improve.
That said, a bullish reversal would be confirmed only above $6,810, as discussed earlier this week.
BTC's inability to capitalize on the violation of the falling trendline could be associated with the fact that the breakout lacked conviction, that is, it was a sideways breach, which is considered a sign of indecision in the marketplace.
As a result, attention has shifted to last week's high of $6,810, which, if scaled, may allow a sustained rally to the September high of $7,402.
A break below $6,376 (lower edge of the range) may embolden the bears to push the cryptocurrency down to the crucial support of $6,230 (horizontal line on the above chart). Acceptance below that level would expose the next major support of the 21-month exponential moving average (EMA) lined up at $6,121.
However, if the bulls manage to push through $6,476 (upper edge of the range), then a rally to $6,810 cannot be ruled out.
Over on the monthly chart, BTC seems to have carved out a bottom along the 21-month EMA. However, the 5-day and 10-day EMAs produced a bear cross last month. As a result, a break below the 21-month EMA cannot be ruled out as long as BTC is trading below the 10-month EMA of $7,114.
- A range breakout could happen if BTC continues to defend the support at $6,376 despite the risk aversion in the financial markets. A break above $6,476, if confirmed, would open the doors to $6,810.
- A range breakdown, if confirmed, would shift risk in favor of a drop to $6,230 and $6,120 (21-month EMA).
- A weekly close (Sunday's close as per UTC) above last week's high of $6,810 would put the bulls in a commanding position.
- A monthly close below the 21-month EMA will likely prove costly.