Tuesday's Market Minute: Bitcoin Breaks Support As Technical Picture Darkens

Bitcoin futures broke through some potentially important support levels on Friday as a result of its 9.3% plunge. The first is /BTC snapped through a shorter-term uptrend that began off the yearly lows in late June and continued through the lows in the middle and end of July. Another development that happened on the same day was the contract gave up the 21-Day Exponential Moving Average and closed below it, which was roughly in confluence with the trendline itself.

This is the sort of confluence that can be useful to watch as the reactions can be energetic if price breaks through. Other things worth noting on this same day include the Parabolic SAR (used by traders to assess trend direction and set stop losses) experiencing a bearish crossover, as well as the MACD which measures momentum. 

The question now is whether the cryptocurrency futures will regroup or if this technical damage is the start of something bigger. It’s worth noting that /BTC is trading below all three commonly followed exponential moving averages (21-day, 63-day, and 252-day) and they’re also all sloping downward, suggesting the overall trend is angled to the downside.

The 21-EMA now becomes an area of resistance near the 22,777 mark. Looking for potential support, one source could be in the form of the Volume Profile Point of Control (the price level with the heaviest trading volume) near 20816. Beyond that, watch the yearly lows at 18,505 as the doorway to further downside.

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