Bitcoin formed a short-term consolidation pattern and could break out soon.

Bitcoin is still trading below its short-term descending trend line on the 1-hour time frame to show that the downtrend is intact. Price is currently consolidating in a small symmetrical triangle with its higher lows, and the direction of the breakout could determine if a continuation or reversal is in order.

A candle closing past the $6,500 area could be enough to confirm an upside breakout and potential reversal while a candle closing below $6,300 could signal that the downtrend will resume. The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, there’s a stronger likelihood for the selloff to resume than to reverse.

The 100 SMA is currently holding as dynamic resistance as well while the 200 SMA is just slightly above the trend line to add another layer of resistance. The gap between the moving averages is also widening to reflect stronger selling pressure.

RSI appears to be on its way down after recently dropping from the overbought region. This reflects that sellers could have the upper hand and push bitcoin lower from here. Similarly stochastic is making its way down so bitcoin could follow suit.

Cryptocurrencies have had a rough ride in the previous week as the SEC decision to delay their ruling on the VanEck/SolidX bitcoin ETF application weighed on sentiment. Optimism was already fading then, so it’s understandable that investors were quick to push the sell button even on the slightest negative update.

This time, traders could continue to hold out for more clues on what the US regulator might decide on the remaining bitcoin ETF applications. These are still open for comments until the latter part of September when the ruling is due.

It would take a set of strong positive updates to revive rallies for bitcoin and its peers, possibly more focus on institutional interest or acquisitions in the space.

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