The bears continued to be in the driver’s seat on Monday, pushing bitcoin (BTC) below $8,000 and opening the doors for a re-test of recent lows near $7,300.
The cryptocurrency found acceptance below the crucial support of $8,217 (prices as per Bitfinex) at 12:00 UTC yesterday, signaling the corrective rally from the low of $7,240 has ended. The emboldened bears then pushed bitcoin down to $7,716 earlier today – its lowest since March 18.
Twitter’s decision to ban all ads related to initial coin offers (ICOs), token sales, exchanges and wallet services may have played a role in pushing prices lower, although it is worth noting that bitcoin had been trading on the back foot well before Twitter news hit the wires, and that the ban news had been widely anticipated in the media.
As of writing, the average price on leading exchanges, as represented by CoinDesk’s Bitcoin Price Index (BPI), stands at $7,935 – down 2.5 percent from the previous day’s close (as per UTC).
Clearly, the bears are in control, however, so far the downside has been capped around $7,700. The 1-hour chart shows the cryptocurrency could rally to $8,271 (former support, now resistance) on the back of a bullish price-RSI divergence.
An upside break of the falling channel could yield a re-test of $8,550-$8,600, however, that will be easier said than done, as suggested by the bearish setup on the daily chart below.
The rounding top-like pattern has established the area around $9,000 as a stiff resistance zone. It also indicates another lower high (bearish pattern) has been made at $9,177.5 (March 21 high).
Further, Monday’s close below $8,211 (61.8 percent Fibonacci retracement) pushed the 5-day moving average (MA) below the 10-day MA (bear cross). Meanwhile, the relative strength index (RSI) has rolled over into the bearish territory (below 50.00).
Hence, prices look set to revisit the recent low of $7,240 and any corrective rally above $8,271 (former support, now resistance) will likely be transient.
Weekly chart (Linear scale): Major support is seen at $6,600
The ascending weekly 50-MA meets the rising trendline (drawn from the July low and September low) around $6,600.
- A minor corrective rally to $8,271-$8,300 cannot be ruled out, but the sustainability of gains is in question.
- Overall, bitcoin looks set to revisit the $7,240 (March 18 low). A violation there would open up downside towards $6,600.
- In the larger scheme of things, only a convincing break above $11,700 would revive the bullish outlook.
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