Bitcoin (BTC) is stuck in a narrowing price range and the direction of the next breakout is far from certain.
The leading cryptocurrency was expected to rise toward $7,000 over the weekend, having moved past a key technical hurdle on Friday. However, contrary to expectations, BTC failed to absorb supply around $6,600 in the last 48 hours.
Even so, the rejection at $6,600 has not proved costly, and BTC’s bears have struggled to bring the cryptocurrency below the psychological support of $6,300.
BTC is now being squeezed into a tight $300 trading range and is changing hands at $6,400 on Bitfinex at press time – up 0.80 percent on a 24-hour basis.
As seen in the chart above, BTC has created a narrowing price range, popularly known as a pennant pattern, over the last five days.
As of writing, the pennant resistance (top end) is located at $6,595 and the support (lower end) is seen at $6,320.
A bullish breakout would be confirmed if the 4-hour candle closes above $6,595. That would add credence to the bullish relative strength index divergence (RSI) and a beach of a key falling trendline witnessed earlier this month and would open the doors to a stronger rally towards $7,000 (psychological hurdle).
However, the bears could feel emboldened if the 4-hour candle closes below $6,320. In this case, BTC could drop below $6,000 (February low). It’s worth noting that a downside break of the pennant would push the RSI below the rising channel support and that would only validate the bearish price pattern.