Prepping for a Pullback? Bitcoin Price Drops Below $6,000

24. October 2017.

Prepping for a Pullback? Bitcoin Price Drops Below $6,000

After rallying to a new record high, bitcoin is once again trending down.

According to Coindesk’s Bitcoin Price Index (BPI), bitcoin prices dipped below $5,800 this morning – prices first passed the $6,000 mark on Friday and set the new all-time high (of $6,148) at 15:00 UTC on Saturday. That figure takes the cumulative returns from the September low of $2,980 to more than 100 percent.

The record rally indicates that the regulatory crackdown in China, and subsequent fears of similar restrictions across the globe, have failed to dampen investor sentiment. Meanwhile, the potential benefits of holding bitcoin ahead of another hard fork (in November) – which promises the creation of a new cryptocurrency – have only boosted its appeal.

However, price action analysis suggests BTC could be setting up for a deeper pullback.

It’s worth noting that bitcoin has rallied close to 500 percent since the start of 2017. In light of the stellar gains, a pullback of more than 20 percent will qualify as healthy correction and not a bear market as widely believed. (A drop of 20 percent or more is considered an entry into a bear market.)

Potential bearish divergence

The daily chart shows:

  • Prices stuck at channel resistance
  • Relative strength index (RSI) is overbought
  • Money flow index (MFI) has breached the rising trend line and has turned downwards from the overbought region
  • Lower highs on the RSI and MFI

The Money Flow Index (MFI), also known as volume-weighted RSI, is an oscillator that uses both price and volume to indicate overbought and oversold conditions.


  • Potential bearish reversal pattern: A negative close below $5,755 (Sunday’s low) would confirm the bearish doji reversal and bearish RSI & MFI divergence. Prices could then witness a deeper pullback to $5,000–$4,800 levels. Bearish divergence occurs when price forms higher highs and indicators form lower highs.
  • Bullish Scenario: Consolidation around $6,000 for a couple of days, followed by an upside break of the channel later this week, would open doors for a sustained rally to $7,073 (Fibonacci extension level).

Skiing image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at [email protected].

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Published at Mon, 23 Oct 2017 11:45:20 +0000

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