Bitcoin seems to have found acceptance below the psychological mark of $10,000 over the weekend, amid increasingly bearish long-term indicators.
After closing below $10,000 on Feb. 22, bitcoin (BTC) hit an 11-day low of $9,304.68 yesterday, as per CoinDesk’s Bitcoin Price Index (BPI). As of writing, the BPI has seen gains and is at $9,666.
The cryptocurrency is down close to 20 percent from the Feb. 20 high of $11,768.58, suggesting the rally from the Feb. 6 lows below $6,000 has stalled.
However, trading volumes have dropped 42 percent from the highs seen on Feb. 20, as per CoinMarketCap, indicating supply is drying up. Hence, the drop from $11,767.58 to $9,400 appears to lack substance and a limited corrective rally could soon be in the offing.
A break above the descending trendline would open up upside towards the head-and-shoulders neckline resistance (former support) seen today at $10,320. A violation there would expose $10,500 (Feb. 24 high).
That said, the outlook as per the weekly relative strength index (RSI) would remain bearish, as long as it stays below the resistance of 53.00 (former support).
As discussed earlier this month, throughout the bull run (from 2015 to December 2017), the bears were never able to push the RSI below 53.00. However, the RSI fell below 53.00 in January, signaling a long-term bullish-to-bearish trend change.
Note that, despite the bullish doji reversal, the bulls failed to push the RSI above 53.00 last week. In fact, it created a lower high at 53.00 (marked by a circle) last week, as bitcoin fell from highs above $11,700 to below $10,000.
- The corrective rally from the lows below $6,000 ended at last week’s highs above $11,700 and the sell-off will likely resume this week or next week, according to the weekly chart.
- BTC is likely to test $8,211 (61.8 percent Fibonacci retracement of the recent rally) in the short-run. A daily close (as per UTC) below that level would shift attention to $6,000.
- A possible corrective rally is likely to run out of steam around the downward sloping (biased bearish) 10-week MA, now seen at $11,251.
- Long-term bearish-to-bullish trend change would be confirmed once the weekly RSI has moved above the resistance at 53.00.
Bear sculpture image via Shutterstock