Yahoo Finance $6K In Sight? Bitcoin's Correction Up Could Be Brief
Bitcoin looks set to revisit November lows after a 22 percent drop, but a minor corrective rally looks to be in the offing beforehand.
At time of writing, CoinDesk's Bitcoin Price Index (BPI) is seen at $8,228, having clocked a five-week low of $7,676 earlier today. Meanwhile, BTC's global average price on CoinMarketCap is $8,293 - down 7.44 percent in the last 24 hours.
Prices fell nearly $1,300 on Wednesday, a move reportedly influenced by Google's decision to ban online advertisements promoting cryptocurrencies and related products. The restriction would come into effect from June.
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However, even before the announcement from the search giant, the technical charts favored a downside move. The sell-off has sent BTC bulls packing and the cryptocurrency faces the risk of further downside in the days ahead.
4-hour chart: Bear flag breakdown confirmed
Bitcoin fell below the flag support of $8,600 yesterday, signaling the sell-off from the recent high of $11,700 has resumed.
Accordingly, losses extended to lows below $7,700 today and could further decline to $5,500 (target as per the measured height method, discussed yesterday) in the next couple of weeks.
Daily chart: Bearish doji continuation pattern
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Tuesday's "inside day" doji candle highlighted bullish exhaustion around the critical double top neckline resistance (former support) of $9,280.
Further, Wednesday's negative follow-through confirmed that the corrective rally from the March 9 low of $8,342 has ended and signaled a revival of the downtrend. The pattern only adds credence to the bear flag breakdown seen on the 4-hour chart.
On the way lower, the cryptocurrency may encounter support at $6,410 (ascending trendline) and $6,000 as shown in the chart below.
Weekly chart (linear scale)
The ascending trendline drawn from the July 2017 low and September 2017 low could offer support around $6,410.
The February low of $6,000 could act as a strong support.
The bearish outside-week reversal confirmation indicates there is plenty scope for a drop to $6,000 (Feb low).
All that said, BTC may witness a minor relief rally, courtesy of the oversold conditions as shown by the hourly chart.
Hourly chart
The bullish price-relative strength index (RSI) divergence could push prices higher to $8,700 (hourly 50-MA) and possibly to $9,000 in the next 24 hours.
However, the rally will likely be short-lived as the moving averages are biased to the bears (sloping downwards).
View
BTC looks set to test $6,000 (February low) over the next week or two.
As of now, it appears the corrective rally will likely run out of steam in the range of $8,600 to $9,000 as the major moving averages - 50MA, 100MA, and 200-MA - on the 1-hour chart and 4-hour chart, are trending lower in favor of the bears.
The 10-day MA (currently seen at $9,204) is also biased to the bears. A daily close (as per UTC) above the 10-day MA would signal bullish invalidation and could yield short-term consolidation.
Meanhwhile, a daily close (as per UTC) above $11,700 would indicate a bearish-to-bullish trend change.
On a ledge image via Shutterstock
