Bitcoin Could Drop Below 8,000 Dollars After 3-Week Low
Bitcoin is now trading on a three week low and now risks dropping below the 8,200 dollar mark according to technical charts. Bitcoin fell to 8,204 dollars on Bitfinex on Saturday which is its lowest level since April 19th when it traded at 8,365 dollars before moving up to a new high of 9,990 dollars.
It’s good to note that bears did not cut through the support at 8,207 dollars in a convincing way on Saturday. The Saturday corrective rally was short lived since Bitcoin did not beat the descending 5-day moving average hurdle which was seen yesterday at 8,760 dollars at Bitfinex before falling to a low of 8,271 dollars today. This price action clearly indicates that Bitcoin is not off the woods yet since the bear grip seems to have strengthened over several days.
The breakdown in this chart shows a continuation of the sell-off which has now opened doors to 7,300 dollar target as per the measured height target even though it does not look evident as at now. The pattern, however, indicates that there is a likelihood of a drop below 8,000 dollars.
Looking at the chart, you will notice that the Relative Strength Index is biased to bears below 50.00 and the 100-candle MA and the 200-candle MA is in downward slope which is also acting in favor of the bears.
There will be a bearish short-term trend as indicated by the downward sloping of the 5-day MA and the 10-day MA. When this is merged with the bearish moves in the hourly chart and even the below monthly chart, there is an indication that Bitcoin will find acceptance below key support of 8,270 dollars with a 50-day MA and an 8,207 dollars 50 percent Fibonacci retracement of the rally between April 1st low and May 5th high. Looking at a similar case then Bitcoin risks dropping below 8,000 dollars.
The Monthly chart shows the move from the April 1st low on 6,425 dollars running out of steam near 10,026 dollars which is a 50 percent Fibonacci retracement of the move from the low in July 2015 to the 2017 December high. The 5-month MA and 10-month MA are now showing a slope downwards favoring the bears for the first time since 2014.
Bitcoin bulls should progress soon otherwise the 5-month MA will cut the 10-month MA from the top confirming a long-term bullish-to-bearish trend change.
Bitcoin looks set to take out support from 8,204 dollars which is likely to drop to 7,787 dollars representing a 61.8 percent Fibonacci retracement on the April 1st rally to the May 5th high or a low of 7,698 dollars representing a 61.8 percent Fibonacci retracement of the July 2015 low to the 2017 December high.
While looking at a bullish scenario, there could be a rebound from 8,207 dollars to a break above 8,760 dollars which would open doors for a move back above 9,000 dollars. A daily close above the 10-day MA which is currently at 9,038 dollars could mean that the sell-off from the current high of 9,990 dollars has ended.