Bitcoin (BTC) is on the defensive today and could suffer deeper losses in the next few days should the bulls fail to defend the key moving average (MA) support, technical charts indicate.
The leading cryptocurrency looked vulnerable to a pullback 24 hours ago, courtesy of the signs of bullish exhaustion near key resistance of $6,800. Hence, the drop to $6436 seen today is not surprising but has certainly boosted the odds of a close (as per UTC) below the all-important 10-day moving average (MA).
It is worth noting that the short-term moving average is still biased to the bulls (rising). So, as discussed yesterday, a strong defense of the 10-day MA support would reinforce the short-term bullish outlook and could yield a rally to $7,000.
As of writing, the leading cryptocurrency is trading at $6,460 on Bitfinex – down 5.5 percent from the high of $6,839 reached over the weekend.
The daily candle has already breached the 10-day MA support of $6,585, however, only a close today (as per UTC) below that level would abort the short-term bullish view put forward by the bullish RSI divergence and the falling channel breakout last week.
That said, the probability of BTC closing below the 10-day MA is quite high as the short duration charts have already turned bearish.
The rising channel breakdown indicates the corrective rally from the June 24 low of $5,755 has ended.
Further, the relative strength index (RSI) has turned bearish (below 50.00). Meanwhile, BTC has also breached the support of 200-candle MA. Clearly, the bears must be feeling emboldened
- The bearish breakdown on the 4-hour chart indicates BTC could test the 50-candle MA, currently located at $6,381, and could close below the 10-day MA today, confirming a short-term bullish invalidation.
- Acceptance below $6,381 (50-candle MA) would expose 6,000 (February low and major psychological support).
- The bulls may build steam for a fresh move higher towards $7,000 if BTC closes above 10-day MA today.
Bitcoin image via Shutterstock