Having defended the key support of $7,455, the bitcoin bulls now need a quick move higher in order to neutralize the threat of a short-term bearish reversal.
As of writing, the cryptocurrency is trading at $7,560 on Bitfinex – down 11 percent from the recent high of $8,507. However, that still marks a gain of more than 30 percent from the June 24 low of $5,755.
So, it is safe to say the bullish trend is still intact. Further, BTC's solid defense of $7,455 (38.2 percent Fibonacci retracement of the rally from the June low) seen in the last 28 hours has raised the prospect of a minor corrective rally.
However, the bulls have little margin for error and the upside needs to gather traction soon as the short-duration technical studies have already adopted a bearish bias, as seen in the chart below.
The bearish crossover between the 5-day and 10-day moving averages (MAs) indicates a short-term bearish setup. Further, the relative strength index (RSI) has breached the key ascending trendline in favor of the bears.
The 50-hour, 100-hour, and 200-hour MAs are trending south and are located one below the other, indicating the path of least resistance is to the downside. Meanwhile, the RSI has dropped below 50.00 (in bearish territory).
Clearly, the short-term charts are aligned in favor of the bears. So, there is a real risk of BTC falling below the crucial support of $7,455 in the next 24 hours.
Moreover, acceptance below that level would only bolster the already bearish setup discussed above and would confirm a short-term bullish-to-bearish trend change.
- BTC's solid defense of $7,455 (38.2 percent Fibonacci retracement) is encouraging, but a positive follow-through needs to happen soon to invalidate the short-term bearish technical studies.
- A lack of positive follow-through in the next few hours will likely yield a drop below $7,455.
- A daily close (as per UTC) below $7,455 would confirm a short-term bullish-to-bearish trend change and would open the doors to $7,000 (psychological support).
- On the higher side, a close (as per UTC) above $8,000 would put the bulls back into the driver's seat.
Disclosure: The author holds no cryptocurrency assets at the time of writing.