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
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.
The above charts show:
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.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View
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