- Bitcoin's recovery from $9,049 to $10,000 lacks substance and may be short lived.
- Signs of bullish exhaustion near $10,000 have emerged on the 4-hour chart. A break below $9,580 would confirm the corrective bounce has ended and allow a drop to $9,000.
- Moving average (MA) studies and key indicators like the relative strength and the Chaikin money flow indices on the daily chart continue to call a bearish move.
- A high-volume break above $10,000 could yield a move to $10,400, but a 4-hour close above $11,080 is needed to invalidate the short-term bearish setup.
Bitcoin's recovery from one-month lows looks to have stalled near $10,000 and the cryptocurrency may end up charting a bearish lower high around the psychological resistance level.
The top cryptocurrency by market value slipped to $9,049 in the European trading hours yesterday, the lowest level since June 19, according to Bitstamp data. That drop came after the bullish higher-lows pattern was invalidated with a move below $9,614 on Tuesday.
The drop was short-lived, as expected, though. Prices bounced up in the U.S. trading hours, keeping the former resistance-turned-support of the $9,097 May 30 high intact.
The recovery, however, looks to have run out of steam, and BTC has spent a better part of the last 13 hours struggling to settle above $10,000.
A persistent failure to convincingly beat $10,000 means the market is no longer viewing sub-$10,000 levels as an opportunity to get involved in the bull market the way it did on July 2, when prices charted a V-shaped recovery from $9,614 to $11,000.
Further, technical charts indicate the bounce seen in the last 24 hours lacks volume support. So, the odds appear stacked in favor of the creation of a bearish lower high at $10,000 and a fall back to $9,000 in the next day or two.
As of writing, BTC is changing hands at $9,850 on Bitstamp, representing 3.5 percent gains on the day.
Buying volumes (green bars) on the hourly chart have been very low throughout the price bounce from $9,049 to today's high of $10,027.
A low-volume recovery often ends up as a "dead cat bounce" – a short-lived recovery after a notable price drop – meaning BTC will likely fall back to $9,000.
Sell volumes (red bars) have been consistently higher than buying volumes ever since BTC topped out at $13,200 on July 10 – a sign of change in market sentiment.
4-hour and daily chart
Multiple candles with long upper wicks (above left) near $10,000 indicate BTC's recovery has run out of steam near $10,000. A break below $9,580 – the low of the doji candle created in the Asian trading hours – would confirm a bearish lower high at $10,000 and allow a drop to $9,000.
The bearish view would be invalidated only if prices invalidate the lower-highs pattern with a high-volume move above $11,080.
That, however, looks unlikely as the daily chart is biased bearish. The 5- and 10-day moving averages are trending south, indicating a bearish setup. The 5- and 50-day MAs are teasing a bearish crossover.
The Chaikin money flow index is now barely holding in positive territory compared to highs above 0.35 seen at the end of June. That indicates a significant weakening of buying pressure.
Further, the relative strength index is reporting bearish conditions with a below-50 print.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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