After breaching key assist on Sunday, emboldened bears may quickly push bitcoin (BTC) costs again in direction of $3,100.
Following a drop to a 3.5-week low of $3,476 at 16:00 UTC yesterday, the cryptocurrency closed at $3,516, successfully invalidating the bullish view put ahead by the upper low of $3,566 carved out on Dec. 27.
That transfer additionally added credence to the bearish reversal signaled by the 9 p.c value drop witnessed final Thursday.
Put merely, the bears have strengthened their management of the market, after the bulls failed to penetrate the head-and-shoulders neckline resistance of $4,130 and construct a stronger rally final week.
As of writing, BTC is altering fingers at $3,530 on Bitstamp, representing a 2 p.c drop on a 24-hour foundation.
Day by day chart
As seen above, BTC discovered acceptance under $3,566 (Dec. 27 low) yesterday, validating the bearish doji reversal confirmed on Jan. 10.
The 14-day relative energy index (RSI) is reporting bearish situations at 42.00, having breached the ascending trendline final week. Additional, the 5- and 10-day shifting averages (MAs) are trending south, indicating bearish setup.
So, it could possibly be argued that the restoration rally from the December low of $3,122 has solely ended up recharging the engines for a recent sell-off.
BTC’s fall again to $3,500 has invalidated the constructive view put forward by the three-day bullish outside-reversal candle of Dec. 20.
Furthermore, the cryptocurrency’s failure to supply a big value rally regardless of the constructive divergence of the RSI, confirmed on Dec. 14, signifies that the bearish sentiment remains to be fairly sturdy.
On the weekly chart, BTC has created a bearish outside-reversal candle (final week’s value motion engulfed the earlier week’s excessive and low) signaling a resumption of the first bearish pattern, as represented by the downward sloping 10-week shifting common (MA).
- BTC may re-test the 200-week MA of $3,266 within the subsequent few days and will lengthen the decline to the December low of $3,122.
- A weekly shut (Sunday as per UTC) under the 200-week MA of $3,266 would open the doorways for a deeper drop under $3,000.
- Acceptance above the downward sloping 10-week MA, at the moment at $3,919, would abort the bearish view.
Disclosure: The creator holds no cryptocurrency belongings on the time of writing.