Bitfarms Stock Plunges As Bitcoin Takes A Nose Dive: What's Next?

On Nov. 15 after the market closed, Bitfarms Ltd BITF reported record third-quarter revenues but the stock was unable to surpass the Nov. 10 high of $9.36 the following day because Bitcoin BTC/USD sold off over 7%.

The Canadian-based Bitcoin self-mining company is affected by both the cryptocurrency market and the general markets, which don’t always move in unison and can cause Bitfarms to swing wildly at times. On Wednesday Bitfarms was following the cryptocurrency market with Bitcoin trading down about 5% while the Nasdaq was making a new all-time high.

See Also: As Bitcoin Falls Below $60K, Here's What 4 Popular Crypto Analysts Are Saying

The Bitfarms Chart: After reaching a high of $9.36, Bitfarms entered into a period of sideways consolidation under a descending trendline. Until Wednesday, Bitfarms had been holding a support level at $9.68, which paired with the descending trendline created a descending triangle pattern on the daily chart.

On Wednesday, Bitfarms fell bearishly through the pattern and printed a lower low, which has now confirmed the stock is trading in a downtrend with the most recent lower high printed on Nov. 15 and the $9.19 level. When the stock fell through the level it was on increasing bullish volume, which indicates the descending triangle was recognized.

If the stock is unable to quickly regain the lower horizontal line of the triangle it is possible Bitfarms will continue lower, although the stock will eventually bounce up to print a lower high. Traders wanting to play the bounce can watch for a reversal signal such as a doji candlestick or hammer candlestick to print.

Bitfarms is trading below the eight-day exponential moving average (EMA) but above the 21-day EMA, with the eight-day EMA trending above the 21-day, which indicates indecision. The stock is trading well above the 50-day simple moving average, however, which indicates longer-term sentiment is bullish.

• Bulls want to see big bullish volume enter Bitfarms to push it back up above the $7.68 level and then for bullish momentum to cause the stock to print a higher high above $9.19 to negate the downtrend. The stock has resistance above the levels at $10.
• Bears want to see sustained bearish volume continue to drop Bitfarms down until it loses support at the 21-day EMA. Below the level there is support at $6.74 and $5.49.

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