After an overnight drop, bitcoin looks to have found acceptance below $9,000 and risks a deeper pullback, the technical charts indicate.
The cryptocurrency hit a one-week low of $8,652 on Bitfinex earlier today and is now trading at $8,700. The 10-percent decline from the weekly high of $9,767 on Wednesday has neutralized the immediate bullish outlook.
Further, the failure to hold above the key technical levels – descending (bearish biased) 100-day moving average (MA) of $9,126 and the double top bearish reversal neckline of $9,280 – will be discouraging for the bulls.
However, only a break below $8,459 would signal a short-term bearish reversal and open the doors for a deeper sell-off.
Daily chart
BTC created a bearish outside-day candle on Wednesday (trading range was wider than Tuesday’s high/low), which, as per textbook rules, is a sign of sudden bearish reversal. That said, traders and analysts usually want to see negative price action on the following day, before calling a bearish reversal.
Accordingly, only a close (as per UTC) today below the key support of $8,459 (April 15 high) would confirm a short-term bullish-to-bearish trend change and open doors for a deeper pullback.
However, BTC is showing signs of a negative follow-through, as currently it is trading under the previous day’s low of $8,765 – though the downside is capped by the ascending (bullish) 10-day moving average at $8,706 and the gradually ascending (bullish) 4-hour 50-day MA.
4-hour chart
BTC may regain some poise if the bulls manage to defend the 4-hour 50-day MA in the next few hours. On the other hand, a failure to hold above the bullish 4-hour 50-day MA and 10-day MA would boost the odds of sustained drop below $8,459.
View
Confirmation of a bearish outside-day reversal would open up downside towards $7,823.
A daily close (as per UTC) below that level would signal a violation of higher lows and higher highs pattern (bullish setup) and would also mean the long-term descending trendline breakout has failed. In such a case, BTC could revisit the April 1 low of $6,425.
Bullish scenario
BTC will likely revisit $9,280 if the bulls manage to defend the 4-hour 50-day MA and 10-day MA in the next few hours.
Acceptance above $9,280 would expose the 200-day moving average, currently located at $9,853.
Water drop image via Shutterstock
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Source: CoinDesk.com
