Bitcoin (BTC) bears have come out victorious in the two-day tug of war with the bulls and may push prices down to $7,000.
The cryptocurrency has been restricted to a narrow range of $8,140 and $7,700 since March 27, according to Bitfinex data. At one point in time yesterday, it appeared as though the bulls had found their footing, thanks to an upside break of the descending trendline and a bullish triangle breakout.
Yet, bitcoin failed to chew through the supply around the $8,000 mark in the U.S. session, allowing the bears to take over. Accordingly, BTC fell below $7,700 at 04:00 UTC today.
As of writing, BTC is changing hands at $7,530 on Bitfinex. Further, the average price across leading exchanges, as represented by CoinDesk’s Bitcoin Price Index is seen at $7,540 – down 5 percent compared to the previous day’s close of $7,937 (as per UTC).
The downside break of the sideways channel signals continuation of the sell-off from the March 24 high of $9,050. The relative strength index (RSI) shows a bear flag breakdown, which adds credence to the bearish set up on the price chart.
So, BTC looks set to test $7,260 (target as per the measured height method) to $7,240 (March 8 low). Additionally, the 78.6 percent Fibonacci retracement of the rally from the Feb. 6 low to Feb. 20 high stands at $7,239 as seen on the daily chart below.
The 5-day moving average (MA) and 10-day MA are biased to the bears (sloping downwards). The RSI has also become bearish.
As per the daily chart, BTC is stuck inside a falling channel (lower highs and lower lows) and could drop to $6,100-$6,000 (falling channel support) if the cryptocurrency finds acceptance below the immediate support at $7,240. That said, the weekly chart (not shown) shows, strong support around $6,600.
The much-feared and overhyped death cross could happen today if BTC falls to $7,000 and might accentuate the losses. However, as discussed yesterday, the death cross could be a blessing in disguise for the bulls, as the bearish signal is often soon followed by an upturn.
BTC looks set to test $7,240 and could possibly break lower to $7,000. Such a move will likely push the 50-day MA below the 200-day MA (the death cross).
Being a lagging indicator, the death cross is unlikely to do significant damage, thus BTC may be able to avoid a weekly close below $6,600.
On the higher side, only a daily close (as per UTC) above $8,135 (upper end of the sideways channel) would abort the bearish view.
Chart image via Shutterstock