Bitcoin Struggles to Build Momentum After Defense of $7.4K Price Support

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  • Bitcoin is struggling to produce a stronger price bounce, despite the defense of the 4-hour chart’s 200-candle moving average – a sign of buyer exhaustion.
  • A bear flag breakdown on the 4-hour chart, if confirmed, would open the doors to levels below $7,000. The daily chart continues to call a move lower to the 50-day price average, currently at $6,861.
  • A minor rally to the $8,200–$8,300 range could be seen if the 4-hour 200-candle average at $7,568 again restricts downside.
  • A UTC close above the downward sloping (bearish) 10-day MA at $8,284 would invalidate the short-term bearish setup.

A key technical line applied the brakes to bitcoin’s (BTC) price sell-off earlier this week, but so far the bounce has been shallow, with upside capped around $7,900.

The leading cryptocurrency by market value began the week on a negative note with prices dropping 7 percent on Monday. The sell-off was extended Tuesday with prices hitting a 2.5-week low of $7,432.

The drop below the widely followed 4-hour chart’s 200-candle moving average (MA), then located at $7,970, was short-lived, with prices recovering to $7,900 by the early European trading hours on Wednesday.

The bounce, however, has stalled near $7,900 over the last 24 hours. The cryptocurrency’s inability to produce a stronger corrective rally despite the defense of crucial support validates buyer exhaustion signaled by last week’s doji candle.

Further, the price recovery seems to have taken the shape of a bearish continuation pattern on short duration technical charts. So, prices may end up falling back to the 200 candle MA support, currently at $7,568.

At time of writing, BTC is changing hands at $7,810, representing a 0.20 percent gain on a 24-hour basis.

4-hour chart

BTC has created a bear flag on the 4-hour chart. Acceptance below the lower edge of that pattern, currently at $7,700, would confirm a flag breakdown – a continuation pattern that usually accelerates the preceding…

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