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Bitcoin Struggles for Gains as Volume Hits 36-Week Low
Bitcoin’s corrective rally has stalled around $6,400 on Monday amid low trading volumes.
The leading cryptocurrency remained bid over the weekend as expected, courtesy of Thursday’s strong reversal from the two-week lows. However, so far, the break above $6,400 has remained elusive, likely due to anemic trading volumes.
Bitcoin’s total trading volume across all cryptocurrency exchanges fell to $2.92 billion on Saturday, the lowest level since November 7, according to CoinMarketCap.
The drop in the trading volume likely indicates the bargain hunters are not particularly impressed by BTC’s reversal from the two-week low of $6,080 (hit on Thursday) and also puts a question mark on the BTC’s ability to hold above the key support of $6,000 (psychological support).
At press time, the leading cryptocurrency is trading largely unchanged on the day around $6,360 on Bitfinex. Meanwhile, the 24-hour trading volume has improved slightly to $3.5 billion, according to CoinMarketCap.
The above chart shows the Bollinger Bands (standard deviation of +2,-2 on 20-day moving average) are flatlined, meaning BTC lacks a clear bias.
A close (as per UTC) above the 20-day MA, currently located at $6,400 would open the doors for completion of the inverse head-and-shoulders target, i.e. BTC could rally to $6,838 (inverse head-and-shoulders neckline resistance). However, BTC will likely have a tough time holding on to gains above 20-day MA if the trading volume remains weak.
Interestingly, the upper Bollinger Band is also located at $6,838, so the level will likely act as a stiff resistance in the near-term.
The relative strength index (RSI) is biased toward the bulls, so there is scope for a move above 20-day MA. On the other hand, a break below $6,240 (rising trendline support) would complicate the matters.
- Low trading volumes are complicating bitcoin price recovery.
- A close (as per UTC) above the 20-day MA of $6,400 would allow a rally to $6,838 (inverse head-and-shoulders neckline + upper Bollinger Band).
- On the downside, a break below $6,000 (February low) would shift risk in favor of a drop to $5,755 (June 24 low).
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin logo cryptocurrency via Shutterstock
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Author: Omkar Godbole
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