Bearish divergence and heavy resistance caught up to price, sending it back down to support.
Resistances - In the event of a reversal there is a small zone of intermediate resistance at $6.9k.
Above that we see the strong level of resistance created by a fib level and the previous price action at $7.2k
Supports - At the moment, price is headed down towards a zone of support at $6.6k, of which held price up for quite some time. As it continues to get tested it will lose strength as buyers at that level begin to exhaust. A break below $6.6k will likely send price down to a potential double bottom at $6k.
Indicators - Moving Averages
The weekly chart held above the 50 MA yesterday on the candle close. That price level is now around $6.9k.
Volume Analysis - We saw price inching up over the past 2 days on low, and decreasing, volume. This was a sign that the price move was not sustainable and buyers were diminishing as price moved upwards
Oscillators - The 1H RSI bearish divergence we observed yesterday continued to play out and we eventually saw a strong drop to follow. Again, these are great predictive tools to give you an edge on where you may believe price is heading before it happens.
Conclusion - $6.6k is a zone that has held strong in the past, but as the bounces dwindle in strength at this zone we can assume the buyers at that level have weakened. As we head to this zone we must keep that in mind and prepare for a drop below it to a stronger zone at $6k which will likely provide at least a bounce.
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