The $1,000 drop witnessed during a 24-hour period in the middle of the last week turned the tide in favor of the bears. As a result, the cryptocurrency was facing a risk of a drop to $6,000 over the weekend.
Despite expectations, the sell-off unexpectedly ran out of steam at a low of $6,119 on Saturday. More importantly, the cryptocurrency has printed higher price lows in the last four days, signaling bearish exhaustion.
Meanwhile, the bulls have not been exercising their buying power either, as indicated by the lower price highs around $6,400. So, it seems that the investor community is evenly split on the immediate prospects for the bitcoin market, leaving the cryptocurrency directionless.
That said, the direction of the range breakout will likely play a big role in determining the short-term price trend.
At press time, BTC is changing hands at $6,320 on Bitfinex, representing a 0.5 percent gain on a 24-hour basis.
Hourly chart
Looking at the hourly chart, BTC is being squeezed between the two lines representing lower highs and higher lows. In technical parlance, this narrowing price range is referred to as the “symmetrical triangle”.
A downside break of the range would add credence to the bearish pennant breakdown seen in the line chart and the rising wedge breakdown seen in the candlestick chart, with prices potentially dropping below $6,000 (February low).
On the other hand, an upside break of the symmetrical triangle could allow a stronger corrective rally towards the 10-day moving average (MA), currently located at $6,660.
Daily chart
Over on the daily chart, the 5-day and 10-day MAs are trending south, indicating a bearish setup. The bears are also boosted by a rising wedge breakdown seen on Sep. 5.
While either side could gain the upper hand going forward, prices are more likely to see a downside break of the symmetrical triangle, the hourly chart suggests.
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The next violation of the narrowing price range on the hourly chart will likely set the tone for the next move in BTC.
A break below $6,260 (lower end of the symmetrical triangle) would bolster the already bearish technical setup and open up downside towards $6,000 (February low).
A move above $6,375 (upper edge of the triangle) would allow a corrective rally to the 10-day MA of $6,660, though the sustainability of gains is under question.
