Bitcoin (BTC) – Caught in a tight sideways range near the summer bottom

Bitcoin (BTC) – Caught in a tight sideways range near the summer bottom

Posted on Sunday, October 9 2022 at 8:18 pm GMT+0000

Bitcoin (BTC) has fallen sharply on Friday after multiple failed attempts to decisively enter the 20,000 zone last week, and is currently weighing on the 20-day simple moving average.

However, the crypto-king has been caught in a tight sideways range following the mid-September drop to a fresh three-month low of around 18,000. Market volatility has since dried remarkably, forcing an aggressive squeeze in the Bollinger bands, which suggests a larger directional move may soon evolve.

Momentum also weakened intensely lately, and oscillators switched to a neutral mode. The MACD, despite remaining below zero, flattened marginally above its signal line, while both the momentum indicator and the ROC are adopting a muted tone near their equilibrium levels.

Following a decisive daily close below the 20-day simple moving average, sellers will push hard to challenge the 18,100 – 17,600 zone linking the September and June lows. Snapping that crucial base will amplify selling pressures initially towards the 16,200 support barrier taken from the late November 2020 low, and the neighboring 15,000 psychological number. In the event downward forces intensify further, the sell-off could stretch towards the August 2020 peak around 12,500.

Otherwise, if buyers re-emerge, profound resistance could stem from the immediate 20,500 region, which managed to curb the last recovery attempt a few days ago. The upper-Bollinger band is located in the neighborhood, adding extra importance to the zone, which makes any violation worthy to watch. Such a move will confirm another rally towards the 22,400 – 22,800 section encompassing the mid-September high. Another step higher from here will trigger an immediate test of the mid-August peak at 25,200.

In short, the recent push for recovery faltered in the vicinity of the 20,000 zone, and buying interest weakened dramatically. The technical picture remains gloomy, and a drop below the summer low of 17,600 will confirm an aggressive sell-off. Only a fast rally above 20,500 could motivate a relief rally.