Bitcoin looks set to end the month below a key long-term support level for the first time in three years.
The 21-month exponential moving average (EMA), which served as a price floor for five months straight, was convincingly breached on Nov. 15. As of writing, the former support-turned-resistance is located at $5,896, while BTC is changing hands at $3,650 on Bitstamp.
The drop below the EMA support marks the resumption of the sell-off from the record high of $20,000 reached in December, meaning the path of least resistance is to the downside. So, while an oversold bounce could be seen in the short-term, a recovery all the way back to levels above the 21-month EMA is ruled out for now.
Therefore, a monthly close on Friday (UTC time) below the 21-month EMA looks like a done deal. Notably, this would be the first monthly close below the EMA support since October 2015.
As seen above, the 21-month EMA restricted the downside from June to October. The persistent bear failure, however, failed to entice the bulls.
The chart also shows that BTC’s last break below the 21-month EMA witnessed in September 2014 remained valid for 13 months. The chart also shows that BTC’s last break below the 21-month EMA witnessed in September 2014 remained valid for 13 months. If that historical data is a guide, then the cryptocurrency could stay below the resistance level for some time.
The outlook for the next 24 hours remains bearish, as BTC is trapped in a falling channel on the 4-hour chart. Further, the stacking order of the 50-candle EMA below the 100-candle EMA, below the 200-candle EMA is a classic bearish indicator…