Bitcoin BTC/USD began a sharp decline at 1 p.m. Tuesday and Dogecoin DOGE/USD followed suit.
On Friday, Benzinga called out that a bullish or bearish break was likely to occur Tuesday because Bitcoin was nearing the apex of a symmetrical triangle pattern, which the apex crypto consolidated over the Labor Day long weekend.
After breaking down from the triangle, Bitcoin plunged almost 4%, Dogecoin plummeted almost 5%, while Ethereum ETH/USD was holding up relatively stronger, sliding about 1% lower.
A bearish day in the general markets didn’t help the situation, with the S&P 500 showing early signs of indecision before beginning to decline about 0.6%.
The bearish action in the stock market and the crypto sector likely came as a disappointment to many retail traders who hoped the onset of the fall trading period may bring big money back to their trading desks for a bullish finish to the third quarter.
Below is a look at the three crypto charts.
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The Bitcoin Chart: Bitcoin began trading in a symmetrical triangle pattern on Aug. 28, making a series of lower highs and higher lows as volatility decreased and the daily trading range tightened. The break down from the triangle has set the crypto into a new downtrend, with the most recent lower high formed on Monday at $20,060 and a new low formed on Tuesday.
- The break down from the pattern also caused Bitcoin to drop below the important $20,000 psychological support level. The area may now act as heavy resistance unless the bulls are able to come in and prop Bitcoin back up in short order.
- If Bitcoin closes the trading day near its low-of-day price, the crypto will print a bearish engulfing candlestick, which could indicate lower prices will come again during Wednesday’s 24-hour trading period.
- If the crypto bounces up to close the period with a lower wick, Bitcoin will print a hammer candlestick, which could indicate a bounce up is in the cards, which will make another lower high the most likely scenario.
- Bitcoin has resistance above at $19,915 and $21,213 and support below at $17,580 and $16,000.
The Ethereum Chart: The wedge Benzinga called out on Ethereum Friday widened over the weekend, and on Tuesday the crypto tested the bottom ascending trendline of the newly drawn pattern and held the area as support. The relative strength could be due to Ethereum’s upcoming merge date.
- Ethereum is trading in an uptrend within the pattern, with the most recent higher high formed during Tuesday’s 24-hour trading session at $1,686.82 and the most recent higher low printed at the $1,534.54 mark on Sept. 3.
- If Ethereum ends the trading day near its low-of-day price, the crypto will print a shooting star candlestick, which could indicate lower prices and a break down from the wedge is on the horizon.
- If the crypto is able to bounce up and close the 24-hour session flat or near the high-of-day, Ethereum may continue to trend higher within the wedge for a longer period of time.
- Ethereum has resistance above at $1,717.41 and $1,957.24 and support below at $1,421.80 and $1,245.
The Dogecoin Chart: Dogecoin broke down from a sideways trading pattern Tuesday on higher-than-average volume, which indicates the bears may have gripped control. On Tuesday afternoon, Dogecoin’s volume on Coinbase was measuring in at about 227,000 compared to the 10-day average of 195,444.
- The drop lower negated a slightly uptrend the crypto had settled into within the horizontal pattern. Dogecoin also lost an important support level at 6 cents, and bullish traders will want to see Dogecoin close the 24-hour session above that level for more confidence going forward.
The eight-day and 21-day exponential moving averages (EMAs) on Dogecoin’s chart have begun to curl downward, which may suggest the two EMAs will continue to guide the crypto lower. Bullish traders will want to see the eight-day EMA regained as support, which happened breifly on Tuesday morning before the crypto rejected the $0.065 level.
- Dogecoin has resistance above at $0.06 and $0.065 and support below at $0.057 and 5 cents.
Photo via Shutterstock.
