- The cryptocurrency has found acceptance below the key 200-day moving average and risks extending the drop to support near $7,500 over the next few days.
- A 4-hour chart indicator is calling a corrective bounce, but it will likely be short-lived.
Bitcoin is on track to post its biggest weekly loss of 2019, having found acceptance below key support for the first time in nearly six months.
The top cryptocurrency by market value is currently trading at $8,030 on Bitstamp, representing a 20 percent drop from this week's (Monday's) opening price of $10,022. That is the biggest weekly loss of 2019 assuming prices remain at similar levels until Sunday's UTC close.
As seen above:
- Bitcoin looks set to confirm its 16th weekly loss of 2019.
- The cryptocurrency has registered double-digit weekly losses only twice in the first six months.
- Prices have registered double-digit weekly losses four times in the third quarter.
- The 13 percent drop seen in the second week of January turned out to be a bear trap:s prices bottomed out around $3,300 over the next five weeks before breaking into a bull market in April.
The latest two-figure drop, though, indicates the bull market from April's lows near $4,000 has ended and the sellers have regained control.
It's worth mentioning that the cryptocurrency has found acceptance below the 200-day MA for the first time since April 2. The breakdown of the long-term support has further confirmed a bullish-to-bearish trend change. The average is currently located at $8,352.
All-in-all, a corrective bounce, if any, over the weekend will likely be short lived and the cryptocurrency could close below $8,719 on Sunday, confirming the biggest weekly loss of 2019.
BTC has dived out a narrowing price on the weekly chart, confirming a bearish reversal.
The 14-week RSI has dipped below 50 for the first time since the end of March. A reading below 50 indicates bearish conditions.
The MACD histogram is producing deeper bars below the zero line, also indicating a strengthening of bearish momentum.
4-hour and daily charts
On the 4-hour chart, the RSI has produced higher lows, indicating scope for a corrective bounce. Further, the 14-day RSI is reporting oversold conditions with a sub-50 print.
Hence, a minor bounce, possibly to levels above the 200-day MA at $8,352 cannot be ruled out.
The daily chart, however, is biased bearish. For instance, the MACD is indicating strong bearish momentum, and the 5- and 10-day MAs are trending south. These averages currently located at $8,553 and $9,337 could offer strong resistance.
Recovery rallies, if any, could be reversed, possibly leading to a deeper drop to $7,500. The bearish setup would be neutralized only if prices rise above $9,097, as discussed yesterday.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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