Further to yesterday's article, bitcoin's chart continues to erode. Yesterday we suggested that a continuation flag pattern may be in the works. Today, the daily chart (left) threatens to drop out of its bullish area, between the blue and red upper bands, into the middle neutral zone. If this happens, it will be a weakening to its daily position.
The hourly chart (right) has found support at today's S1 pivot. If this fails to hold, the stochastic will likely drift into its lower quintile (blue arrow). This level is dangerous as it denotes downside momentum. I.e. if the indicator falls below 20 and holds, the cryptocurrency will continue to be pressured to the downside. This weakness will bring the flag pattern closer to completion and give a greater probability of a bear market rally scenario. As such, we continue to monitor the oscillator for confirmation or rejection.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.