Bitcoin Risks Short-Term Bear Reversal Below $7.4K Price Support

Bitcoin's bulls need to keep prices above key support at $7,432 to avert a short-term bearish reversal.

AccessTimeIconJun 10, 2019 at 11:00 a.m. UTC
Updated Sep 13, 2021 at 9:17 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

View

  • Bitcoin is on the defensive, having closed below $8,000 last week. The price has also established a bearish lower high at $8,135.
  • A short-term bullish-to-bearish trend change, however, would be confirmed if the price drops below $7,432 (June 4 low), establishing a lower low.
  • With the weekly chart reporting a bearish candlestick pattern, a UTC close below $7,432 looks likely.
  • The daily relative strength index's move above the falling trendline would revive the short-term bullish outlook.

Bitcoin's (BTC) bulls need to keep prices above key support at $7,432 to avert a short-term bearish reversal.

At the current price of $7,685 (as per Bitstamp), the leading cryptocurrency by market value is down 15 percent from the May 30 high of $9,097 – the highest level since the same month in 2018

The double-digit price drop has spurred fears of a trend reversal. After all, prices have found acceptance below the crucial 30-day price average. Further, key technical indicators are flashing signs of bullish exhaustion.

Even so, it is still too early to call a bearish reversal as BTC is yet to confirm the most basic of all bearish chart patterns, a paired lower high and lower low.

A lower high has been established, though, with the bounce from the June 4 low of $7,432 topping out at $8,135 on June 7.

Therefore, the immediate outlook is neutral and a bearish reversal would only be confirmed if BTC drops below $7,432 to print that lower low.

With the price currently trading at $7,730, the short-term bullish-to-bearish trend change is less than $300 away.

Daily chart

btcusd-daily-33

The lower high created by BTC’s shallow bounce from the June 4 low of $7,432 looks to be the right shoulder of a head-and-shoulders bearish reversal pattern.

A UTC close below $7,432 would activate twin bearish cues: a lower high/lower low and a head-and-shoulders (H&S) breakdown.

The H&S breakdown, if confirmed, would create room for a drop to $5,800 (target as per the measured move method). On the way lower, BTC may find support at the 50-day MA, currently at $7,000.

With the relative strength index (RSI) reporting a bearish divergence, a close below $7,432 looks likely.

Weekly chart

btcusd-weekly-15

BTC fell 12.6 percent last week and closed Sunday (UTC time) well below $8,000, validating the bullish exhaustion signaled by the previous week’s doji candle.

Essentially, the doji candle and the bearish follow-through indicate the period of indecision or exhaustion in the market place has ended with the bears victorious.

The risks, therefore, are skewed to the downside.

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

Bitcoin image via CoinDesk archives; charts by Trading View

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.