Stalled Bitcoin Recovery Raises Risk of Drop to $6K
Bitcoin (BTC) is once more facing a drop to (or below) $6,000, with both short- and long-duration charts being aligned in favor of the bears.
The cryptocurrency found acceptance above the key resistance of $6,425 (April 1 low) in the second half of last week, raising the prospects of a corrective rally towards the $7,000 mark.
Further, while a fall to $6,000 following a bear flag breakdown on Friday seemed likely, losses were unexpectedly cut short at $6,300, signaling bearish exhaustion.
Yet, the leading cryptocurrency did not find any takers over the weekend, leaving trading flat-lined above $6,500.
Courtesy of the drop from $6,573 (Sunday's high) to $6,370 (today's low), the short duration charts have now turned bearish. Meanwhile, the long duration charts continue calling a bearish move.
As of writing, BTC is changing hands at $6,430 on Bitfinex – down 1.3 percent over 24 hours and is looking southwards.
4-hour chart
BTC's drop to $6,370 earlier today confirmed a downside break of the pennant – a bearish continuation pattern indicating the sell-off from the high of $7,638 has resumed.
As a result, the cryptocurrency could slide to $5,820 (target as per the measured height method, i.e. the difference between the pennant high and low subtracted from the breakdown price).
The moving averages (MAs) are also biased bearish, with the 50-candle, 100-candle and 200-candle MAs all trending south.
Further, the relative strength index (RSI) is struggling to rise above 50.00 (into bullish territory).
Daily chart
BTC remains trapped inside a falling channel, the RSI remains below 50.00 (in bearish territory) and the 10-day MA is falling (bearish).
Weekly chart
The 5-week and 10-week MAs are losing altitude, signaling a bearish setup and adding credence to the pennant breakdown.
The 10-week MA is about to cross the 50-week MA from above (bearish crossover) for the first time since September 2015.
View BTC will likely test $6,000 this week and could extend losses further towards $5,820. On the higher side, a convincing break above $6,618 (resistance seen in 4-hour chart) would open up upside towards the 5-week MA, currently located at $6,943. Only a weekly close above $7,959 (50-week MA) would abort the long-term bearish view.Dice image via Shutterstock
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