- Bitcoin’s price volatility, as represented by the daily trading range, jumped to a 17-month high on Wednesday.
- The cryptocurrency has dropped from $13,880 to $11,200 in the last 15 hours and could slide further to $10,000, according to the bearish setup on the hourly chart.
- A possible falling channel breakout on the hourly chart would open the doors to a retest of Wednesday’s high of $13,880.
- The outlook on the long duration charts remains bullish.
Bitcoin is witnessing a technical correction a day after printing the biggest one-day trading range since January 2018.
The leading cryptocurrency by market value is currently trading at $11,780, representing a 15 percent drop from the 17-month high of $13,880 hit on Wednesday.
The double-digit pullback has come after a near 90-degree price rise from $7,500 to $13,800 in the 17 days to June 26 and looks like nothing more than a technical correction.
After all, indicators were flashing extremely overbought conditions 24-hours ago. For instance, the widely tracked 14-week relative strength index was hovering at levels last seen in January 2018, as discussed yesterday.
However, despite the pullback, BTC is still up 183 percent on a quarter-to-date basis, its best three-month performance since the final quarter of 2017.
What’s even more notable is that the magnitude of the daily price moves is reminiscent of the cryptocurrency market frenzy of January 2018.
The spread between the daily price high and low was $2,041 on Wednesday – the highest since Jan. 17, 2018. Back then, BTC witnessed a trading range of $2,275 with prices printing a high and low of $11,678 and $9,402, respectively, according to data source CoinMarketCap.
- The daily trading range has jumped above $2,000 for the first time in over 17 months.
- The $4,110 spread seen on Dec. 22, 2017, is the highest to date.
- The average daily trading range of $358 seen so far this quarter marks a 311-percent rise on the average daily range of $87 seen in Q1.
Volatility, as represented by daily price range, has surged in the second quarter and may remain high in coming months, with experts predicting a parabolic rise to fresh record highs over $20,000.
Bitcoin, however, may witness a deeper short-term correction in the next day or two, according to the intraday charts.
The cryptocurrency has established a bearish lower-highs and lower-lows pattern (falling channel) in the last 24 hours on the back of growing sell volumes (red bars).
Further, the relative strength index (RSI) is now reporting bearish conditions with a below-50 print.
Supporting the case for a deeper correction is the violation of the 50-hour moving average support. Throughout the recent rally from $7,500 to $13,800, dips to or below the 50-hour MA ended up reversing the pullback with a move to fresh multi-month highs.
BTC, therefore, could penetrate the support at $11,247 (horizontal line) and slide toward $10,300–$10,000.
A drop below $11,247, however, may remain elusive if the price breaks higher from the falling channel, in which case a retest of $13,800 could be seen.
It is worth noting that a deeper pullback to $10,000, if any, will likely be transient, as the long duration charts are still biased bullish.
Daily and monthly charts
The bullish higher-lows and higher-highs structure is intact on both the daily and weekly charts.
The 5- and 10-day MAs continue to trend north, indicating a bullish setup, and could restrict losses. The averages are currently located at $11,666 and $10,713.
Both the falling channel breakout and the bullish crossover of the 5- and 10-month MAs also indicate the path of least resistance is to the higher side.
Disclosure: The author holds no cryptocurrency at the time of writing
Roller coaster image via Shutterstock; charts by TradingView