- Bitcoin falling wedge pattern break opens the Pandora box as target shifts to $7,600 and $7,200.
- The temporary support at $8,000 has to hold if Bitcoin bulls desire to avoid a trip to $7,600.
It is apparent that Bitcoin and the majority of cryptocurrencies are yet to bottom. By Bottoming I do not mean it sliding to the levels experienced in November and December but to levels within the current trend. For a period of over three months from April to June, Bitcoin recorded incredible gains month-over-month. However, the barrier encountered at $13,800 opened the Pandora box; effects of which are biting the bulls at their backs.
Following the recovery from the lows at $7,700, Bitcoin ascended to the levels at $8,800. Higher movements became untenable as bears swung into action. The price is currently lethargic above $8,000. A brief correction to levels above $8,300 this week was a bull trap as a quick reversal ensued.
BTC/USD 4-hour chart
Looking at the 4-hour we see the ongoing bearish momentum as the aftermath of the broken rising wedge pattern. The pattern is usually interpreted as a reversal signal especially when its support is breached amid an up-trending market (similar to Bitcoin’s in the last couple of weeks.
From a technical perspective, the downtrend is likely to continue pressing down on key support areas including $8,000, $7,800 and the major support at $7,700. The Relative Strength Index (RSI) suggests that continued bearish action as it slides into the oversold region. Besides, the Moving Average Convergence Divergence (MACD) emphasizes the downside action with the increasing bearish divergence. The target to the south is set at $7,600 (a possible bottom for Bitcoin) while $7,200 is an overstretch.
Bitcoin Key Technical Indicators
Spot rate: $8,054
Support: $8,000, $7,800 and $7,000
Resistance: $8,200 and $8,400
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