Bitcoin Recovers From 2-Week Low But Price Outlook Remains Bearish

Bitcoin Recovers From 2-Week Low But Price Outlook Remains Bearish

                             

Bitcoin’s (BTC) ongoing corrective bounce could be short-lived,

 

  • Bitcoin’s short-term outlook has turned bearish, courtesy of Tuesday’s UTC close below the 30-day average of price. A key daily and 3-day chart indicator is also indicating an end of the price rally from December lows.
  • Hence, BTC’s $400 recovery from 2.5-week lows hit on Tuesday could be short-lived. Prices risk falling to $7,000 over the next few days.
  • The hourly chart indicates the ongoing recovery may be extended to $8,000 before a potential slide toward $7,000.
  • A UTC close above the 10-day price average at $8,383 is needed to invalidate the short-term bearish setup.

Bitcoin’s (BTC) ongoing corrective bounce could be short-lived, as the charts are signaling a short-term bullish-to-bearish trend change. The premiere cryptocurrency is currently trading at $7,822 on Bitstamp – up almost $400 from the low of $7,432 hit yesterday. However, Tuesday’s UTC close below the 30-day moving average (MA) may embolden sellers, putting the sustainability of the gains in doubt.

The 30-day MA has served as strong support throughout the rally from early February lows near $3,500 to the recent high of $9,097. Essentially, BTC created multiple bullish higher lows along that line over the last four months, as discussed yesterday. Now, the short-term outlook has turned bearish with the first UTC close below the average since Feb. 8. Other widely-tracked technical indicators are also signaling a trend change in favor of the bears.

Daily chart

The 14-day relative strength index (RSI) has dived out of the rising trendline representing a rally from December lows near $3,100, and is now teasing a drop into a bearish territory with a reading below 50.00. Further, the 5- and 10-day moving averages have produced a bearish crossover. The Chaikin money flow index – which takes into account both the price and trading volumes – is losing altitude, a sign of weakening buying pressure.

The price action seen at press time also indicates that the tide has turned, with BTC struggling to register big gains above the 30-day MA, currently at $7,772. That BTC is revisiting the 30-day MA hurdle is not surprising, as markets tend to crowd out weak hands (buyers in this case) before falling on price breakdowns/breakouts. Overall, the cryptocurrency looks set to test the psychological support of $7,000 over the next few days.

3-day chart

On the 3-day chart, the RSI has rolled over from overbought levels above 70, signaling scope for deeper correction. The indicator diverged in favor of the bears (lower highs) earlier this week. The Chaikin money flow index is also beginning to lose altitude on this time-frame. Thus, BTC risks falling to the 200-candle MA, currently flatlined at $7,211.

Hourly chart

The hourly chart tells a slightly different story, reporting a bullish divergence (higher lows) of the RSI. So BTC may extend its recovery to $8,000, before a potential slide toward $7,000, as suggested by the daily and 3-day charts. The short-term bias will remain bearish as long as prices are held below the 10-day MA, currently at $8,383.The leader in blockchain news, 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.

This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

Article Produced By
Omkar Godbole

Omkar Godbole is the market reporter for CoinDesk, the global leader in blockchain news, where he produces technical chart-based price updates on Bitcoin and other alternative currencies.

https://www.coindesk.com/bitcoin-recovers-from-2-5-week-lows-but-price-outlook-remains-bearish

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