Short-Lived Rebound? Bitcoin Struggles to Retake $7,200

Bitcoin traders seem a touch tentative today.

At press time, the bitcoin-U.S. dollar (BTC/USD) exchange rate is at $7,200 levels. BTC prices dropped to a four-day low below $6,950 yesterday before regaining poise, although the 5-day moving average (located above $7,200) is proving tough to crack.

So has the pullback run out of steam? Comments on social media indicate that, while some traders see the potential for a healthy correction to $6,500, others predict the market is likely to stay volatile ahead of the expected Segwit2x hard fork.

The odds seem high that the pullback has legs, given that the sell-off on Monday was backed by a 30 percent surge in volumes. A high-volume price drop usually means the investors sold in large quantities and is considered a negative indicator.

However, Google search volumes have declined over the last 18 hours, perhaps validating the argument that the retreat from the record highs is anything but "panic selling." Search volumes tend to go up during such events as investors scout for information.

Meanwhile, the price action analysis indicates bitcoin is likely to witness consolidation with downside bias over the next couple of days.

The above chart shows:

A bearish doji reversal occurs when a doji candle (one with a virtually equal open/close price) is followed by a negative price action on the following day. On the above chart, Sunday's doji candle was followed by a big red candle on Monday.

Bouncing ball image via Shutterstock