Bitcoin's (BTC) drop to one-month lows below $8,000 has strengthened the bear grip on the markets, the technical charts indicate.
The cryptocurrency fell to $7,925 on Bitfinex earlier today - the lowest level since April 18 and has retraced 50 percent of the rally from the April 1 low of $6,425 to May 5 high of $9,990.
As of writing, BTC is changing hands at $8,120, representing a 2 percent drop in the last 24 hours. The recovery from the low of $7,925 could be associated with the oversold conditions shown by the relative strength index (RSI) in the hourly chart.
However, the gains will likely be short-lived as the odds are stacked against the bulls, according to technical charts.
BTC closed well below the 50-day moving average (MA) yesterday, signaling a continuation of the sell-off from the recent high of $9,990. Further, BTC has also found acceptance below $8,207 (50 percent Fibonacci retracement), a level which acted as a strong support since May 12.
The 5-day moving average (MA) and the 10-day MA continues to slope downwards in favor of the bears. The relative strength index (RSI) is also biased bearish (below 50.00 and falling).
And last but not the least, BTC's turn lower from $8,884 (May 14 high) and drop below $8,100 yesterday have established a lower highs and lows pattern (bearish setup).
So, it is quite clear that the drop to one-month lows in the last 24 hours has the put bears in the driver's seat.
BTC looks set to test the immediate support lined up at $7,787 (61.8 percent Fibonacci retracement). A daily close (as per UTC) below that level would be the final confirmation of bearish trend reversal and will likely be followed by a sell-off $7,000.
Only a daily close (as per UTC) above the 10-day MA (currently seen at $8,555) would abort the bearish view and could yield sideways to positive action.
Bitcoin image via Shutterstock