Bitcoin Price Defies Oversold Conditions to Hit 15-Month Low

Bitcoin BTC$89,646.44 tumbled to 15-month lows earlier today, dashing hopes of a rally signaled by current extreme oversold conditions.

The world's largest cryptocurrency by market capitalization fell to $3,200 on Bitstamp at 00:15 UTC – the lowest level since September 2017.

BTC was trapped in a five-day-long narrowing price range 24 hours ago and showed signs that it might break upwards with a strong move toward the crucial resistance at $3,633.

These bullish expectations were based largely on a premise that the sellers are facing exhaustion, as indicated by the 14-week relative strength index (RSI), having engineered a 49 percent price drop in the last four weeks.

Further, evidence of bargain hunting had emerged earlier this week in the form of a three-day inverted hammer candle.

Even so, BTC dived out of the narrowing price range in U.S. trading hours yesterday, killing the prospects of a short-term inverted hammer bullish reversal above $3,633.

BTC's persistent failure to produce a notable price bounce despite extreme oversold conditions indicates that the bearish sentiment is very strong. As a result, a convincing break below the 200-week moving average (MA) support of $3,170 cannot be ruled out.

At press time, BTC is changing hands at $3,250 on Bitstamp, representing a 2 percent decline on a 24-hour basis.

4-hour chart

The symmetrical triangle breakdown seen in the 4-hour chart indicates a resumption of the sell-off from the Nov. 29 high of $4,410.

The stacking order of the 50-candle moving average (MA), below the 100-candle MA, below the 200-candle SMA, is a classic bear indicator. The RSI has also fallen back into bearish territory below 50.00.

BTC, therefore, risks falling to the psychological level of $3,000. On the way lower, it may encounter support at $3,179 (200-week MA).

Daily chart

As seen above, BTC has charted lower price highs (marked by arrows) along the downward sloping 10-day exponential moving average (EMA). Notably, BTC persistently failed to close above that EMA hurdle at the end of the last month.

Hence, the 10-day EMA, currently at $3,465, is the level to beat for the bulls.

View

• The range breakdown on the hourly chart may have opened the doors for a deeper drop to $3,000.
• The 14-week RSI remains below 30.00, marking oversold conditions. Recent price action, however, indicates that the market is paying little heed to the indicator.
• A UTC close above the 10-day EMA of $3,465, if confirmed, could be considered a sign of short-term bullish reversal.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View