Bitcoin’s Price Breaks Through Support As Stocks Go South

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Bitcoin (BTC) has dropped out of the tight trading range seen recently, paralleling losses in the U.S. stock markets.

The leading cryptocurrency, which was trapped in a triangle pattern (narrowing range) above $6,400 yesterday, looked set for a breakout.

However, the bullish technical setup failed and BTC found acceptance below the triangle support of $6,430 at 17:30 yesterday, possibly due to risk aversion in the U.S. equities – the S&P 500 opened on a negative note Thursday and closed with a 1.4 percent loss.

That argument has merit as bitcoin and the S&P have correlated on and off for almost a year, each taking turns as the leading indicator. Of late, the S&P 500 index has been leading the BTC market by 12 hours or more.

At press time, BTC is changing hands at $6,380 on Coinbase, representing a 1.19 percent drop on a 24-hour basis.

The triangle breakdown witnessed yesterday may have emboldened the bears. So far, however, the downside has been restricted around $6,350

Hourly Chart

As seen in the above chart, the 50-, 100-, and 200-hour exponential moving averages (EMAs) have turned lower in favor of the bears following the range breakdown.

Further, the stacking order of the 50-hour EMA below the 100-hour EMA, below the 200-hour EMA is a classic bear signal.

Therefore, a drop to $6,230 could be in the offing.

BTC and S&P 500 chart

The above charts show:

  • BTC has likely carved out a classic bottom around $6,000.
  • Since June 2016, the S&P 500 has repeatedly found buyers around the 200-day MA. As a result, the dips to or below the MA have been short-lived.

If the index finds acceptance below the 200-day MA, then the risk aversion will likely worsen and that could push BTC below the all-important level of $6,000.

So, it seems safe to say that $6,000 and the 200-day MA line on S&P 500 are key levels to watch out for in the near-term.

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  • The triangle breakdown has opened the doors to $6,230 (key support zone as per the hourly chart).
  • A move above $6,435 would invalidate the bearish setup.
  • S&P 500’s sustained move below the 200-day MA could be considered a warning that BTC is about to break below $6,000.

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Source: https://www.coindesk.com/bitcoins-price-breaks-through-support-as-stocks-go-south/


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