Bitfarms, Ltd BITF was falling about 4.5% lower intraday on Wednesday in sympathy with Bitcoin BTC/USD and Ethereum ETH/USD, which were trading down about 2% and 2.5%, respectively.
The blockchain infrastructure company has taken a beating over the past month amid a slump in the cryptocurrency market, with seemingly no end in sight. While Bitcoin and Ethereum have declined about 31% and 22%, respectively, off their Nov. 10 all-time highs, Bitfarms has lost over half of its value from the Nov. 10 high of $9.36.
The stock is trading in a steep downtrend, however there may be a sign that a bounce is coming. Bitfarms is entering into oversold territory on the daily chart, with a relative strength index registering at just above the 30% level.
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The Bitfarms Chart: Bitfarms has made a consistent series of lower highs and lower lows in its descent, with the most recent lower high printed on Dec. 7 at the $6.66 mark and the most recent lower low created on Wednesday at $4.61. The stock is in need of a bounce, even if it’s only to print another lower high before declining further, and the bounce seems imminent considering Bitfarms’ oversold condition.
On Wednesday, Bitfarms was bouncing up from the support level at $4.59 and if the stock closes the trading day near the $4.80 level it will print a hammer candlestick. This type of candlestick, when found at the bottom of a trend, can indicate a reversal to the upside is in the cards.
Whether Bitfarms can reverse its trend will likely depend on which direction Bitcoin and Ethereum take through the remainder of the week. Since mining stocks are often reactive to the prices of the apex cryptocurrencies, traders not already holding a position in Bitfarms may have time to enter the stock before an uptrend begins.
Bitfarms is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The stock is also trading below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
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- Bulls want to see Bitfarms hold above the $4.59 level and for big bullish volume to come in and push the stock up over a higher resistance zone at $5.49, which could help Bitfarms to regain support at the eight-day EMA, above the levels there is further resistance at $6.18 and $6.74.
- Bears want to see big bearish volume come in and drop Bitfarms down below the $4.50 level, which will confirm the downtrend is still intact. Below the level, there is support at $3.83 and $3.16.
- Related Link: Crypto Miners Expanding Operations Faster, Greener, and More Efficiently
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