Bitcoin's failed bull move on Sunday has left the doors open for the bears to make a comeback.
The inverse head-and-shoulders breakout on May 20 signaled a short-term bullish reversal that could have seen bitcoin rise to $9,000 (target as per the measured height method).
However, the bulls ran out of steam at a high of $8,644 yesterday and prices had fallen back to $8,240 at time of writing – a drop of 2.8 percent over the last 24 hours, according to Bitfinex.
The decline did not come as a surprise, though, given the breakout lacked volume support, and a drop to $8,000 could now be on the cards.
As seen in the chart above, BTC fell back below the inverse head-and-shoulders neckline yesterday, weakening the bulls and has established a lower-high and lower-low pattern (bearish setup).
While a failed breakout usually indicates a bigger-picture bearish reversal, in this case it means the corrective rally from the low of $7,925 has ended and the sell-off from the May 5 high of $9,990 has resumed. Thus, prices could drop below the immediate support of $8,207 (50 percent Fibonacci retracement) seen in the daily chart below.
A break below $8,207 (50 percent Fibonacci retracement) would bolster the bearish setup seen in the hourly chart and would allow a drop to $8,000.
Note, though, that the 5-day and 10-day moving averages are beginning to curl upwards, so if the price moves above $8,408 (daily high), the bulls could make a comeback.
- BTC looks set to take out support at $8,207 and drop to $8,000 in the next 24 hours.
- A daily close (as per UTC) below $8,000 would signal a revival of the sell-off from the May 5 high of $9,990. In such a case, bitcoin could suffer a deeper sell-off towards $7,500.
- On the higher side, a move above $8,408 would open the doors to $8,858 (100-day moving average).
- A daily close above that level would signal a bullish trend reversal and could yield rally to $10,000.
Bitcoins and USD 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.