Below $7K: Bitcoin Price Looks Indecisive After 19-Day Low

MARKETS
Omkar Godbole
Aug 6, 2018 at 11:00 UTC  |  Updated  Aug 7, 2018 at 11:34 UTC

Bitcoin's (BTC) price is trading in an indecisive manner after hitting 19-day lows below $6,900 on Sunday, but could pick up a bid on acceptance above $7,100, technical studies indicate.

The leading cryptocurrency fell to $6,890 on Bitfinex yesterday – its lowest level since July 17 – before ending the day (as per UTC) on a flat note at $7,025.

The price action indicates BTC lacks clear bias, but could also be considered a sign of bearish exhaustion, as the prices have already made a 21 percent slide from the recent high of $8,507.

If the bulls are able to push prices above Sunday's high of $7,090, then a minor corrective rally could be in the offing. On the other hand, a slide below the previous day's low of $6,890 would revive the bearish view.

At press time, BTC is trading at $6,975 – down 0.80 percent on a 24-hour basis.

Daily chart

The above chart shows, BTC created a doji candle (marking indecision) on Sunday at the 50-day moving average (MA) support, making today's close (as per UTC) pivotal.

A bull doji reversal would be confirmed if BTC closes today (as per UTC) above $7,090 (Sunday's doji candle high). In this case, a corrective rally to the 100-day MA, currently located at $7,474, could be seen.

Meanwhile, a close (as per UTC) below $6,890 (Sunday's doji candle low) would signal a continuation of the sell-off from the July high of $8,507.

If the bulls fail to force a rally soon, the focus would quickly shift back to the bearish factors: downward sloping 5-day and 10-day MAs, the breach of the key support of 100-day MA last week and a bearish relative strength index (RSI).

Further, BTC's close proximity to the all-important inverse head-and-shoulders neckline support (former resistance) of $6,820 is another big reason why the bulls need to make a quick comeback.

A move below $6,820 would invalidate the bearish-to-bullish trend change confirmed by the inverse head-and-shoulders breakout on July 17 and would shift risk in favor of a drop below the rising trendline (yellow dotted line).

Weekly chart

As seen on the above chart, the long-term bullish view has been invalidated by BTC's close at $7,025 yesterday.

BTC closed above the falling channel resistance in the previous week, *seeming to confirm* a long-run bearish-to-bullish trend change.  However, the breakout ended up being a bull trap [comma] as the cryptocurrency fell back inside the channel last week, invalidating the long-term bullish outlook

View

  • BTC could rise back to 100-day MA of $7,474 if prices close today above $7,090. That said, the short-term bias would remain bearish as long as the 5-day and 10-day MAs are trending south.
  • A close today below $6,890 would increase the risk of a drop below the key rising trendline support, currently seen at $6,700.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View

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