Bitcoin's (BTC) corrective rally has run out of steam in the last 12 hours.
While that's not good news for the bulls, only a clear break below $7,000 would kill the odds of a move higher to $7,800–$8,000, the technical charts indicate.
The cryptocurrency clocked a high of $7,509 at 19:00 UTC yesterday, according to Bitfinex data, before retreating to $7,070 at time of writing.
The pullback has neutralized the immediate bullish outlook. Furthermore, the cryptocurrency has created a minor, bearish head-and-shoulders pattern, as seen in the chart below.
A break below $7,250 (head-and-shoulders neckline) would add credence to the breach of the ascending trendline and will likely yield a drop to $7,000 (target as per the measured height method). That would mean the corrective rally from the low of $6,425 has ended, given the head-and-shoulders is a bearish reversal pattern.
However, the momentum studies are still biased to the bulls: 50-hour moving average (MA) and 100-hour MA are climbing, while the 200-hour MA has shed bearish bias (flatlined). So for now, it appears any dip to or below $7,000 will likely be short-lived.
That said, the odds of a corrective rally to $7,800 (channel resistance) and $8,000 (psychological mark) would drop sharply if BTC closes (as per UTC) below $7,000.
BTC closed yesterday above the key resistance (now support) of $7,240 (March 18), strengthening the case for a corrective rally to $7,800.
The 5-day MA has turned higher (adopted bullish bias) in response to the uptick in prices.
If, however, bitcoin closes below $7,000 today, it would add credence to the downward sloping (bearish biased) 10-day MA and signal failure to hold above $7,240. Further, the 5-day MA would adopt a bearish bias, derailing the bottoming out process.
Hence, BTC needs to defend $7,000 to avoid further losses.
- Acceptance below $7,250 could yield a pullback to $7,000, although the decline could be quickly undone as suggested by the positive hourly momentum studies.
- A close below $7,000 would signal the corrective rally from $6,425 has ended at $7,509.
- On the higher side, a convincing move above $7,509 would allow a rally to $7,800 (falling channel resistance).
- An upside break of the falling channel would confirm the short-term bullish reversal.
Bitcoin image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, 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.