It was been a worrisome week for owners of Bitcoin following a drop to six-week lows earlier today, the leading cryptocurrency by market value fell below $3,470 at 04:45 UTC, confirming a downside break of a triangle pattern. That range breakdown was followed by a quick slide to $3,357 – the lowest level since Dec. 17 – according to Bitstamp data.
A prolonged period of consolidation usually yields a big move in the direction of the breakout. For instance, BTC ended a multi-week-long trading range with a move below $6,000 on Nov. 14 and what followed was a violent sell-off to levels below $4,000.
However, the duration of the recent consolidation was shorter than the one seen before the big bearish move of Nov. 14. So, the magnitude of any post-breakdown move would likely be smaller too.
Nevertheless, the latest range breakdown could at least yield re-test of December lows near $3,100, as the primary trend represented by the downward sloping 10-week moving average (MA) is negative.
The bearish case looks even stronger if we take into account the bull failure seen over the weekend. Prices had turned in favor of the bulls with a move to $3,658 on Saturday. That triangle breakout, however, petered out, with prices falling back to $3,500 yesterday. A failed breakout is widely considered a strong bearish signal.
Possibly adding extra downward pressure on prices, safe-haven asset gold – which has been inversely correlated with BTC since November – found acceptance above $1,300 on Friday.