Bitcoin (BTC) is on the back foot having hit three-week lows over the weekend and now risks deeper losses below $8,200, the technical charts indicate.
The cryptocurrency fell to $8,204 on Bitfinex on Saturday - the lowest level since April 19 - and was last seen changing hands at $8,365, down around 16 percent from the recent high of $9,990.
Note, the bears failed to cut through the support at $8,207 (the 50 percent Fibonacci retracement of the rally from the April 1 low to the May 5 high) in a convincing manner on Saturday. However, the ensuing corrective rally was also short-lived: BTC failed to beat the descending 5-day moving average (MA) hurdle, seen yesterday at $8,760 and fell to a low of $8,271 today.
The price action indicates BTC is clearly not out of the woods yet and, if anything, the bear grip seems to have strengthened over the last few days.
The bear flag breakdown indicated on the chart signals a continuation of the sell-off and has opened the doors to $7,300 (target as per the measured height method), although the target looks far fetched as of now. Nevertheless, the pattern does indicate scope for a drop below $8,000.
The relative strength index (RSI) is biased to the bears (below 50.00) and the 100-candle moving average (MA) and the 200-candle MA continue to slope downwards, also in favor of the bears.
The chart shows the rally from the April 1 low of $6,425 ran out of steam near $10,026 (50 percent Fibonacci retracement of the rally from the July 2015 low to the December 2017 high) and the 5-month and 10-month MAs are beginning to slope downwards in favor of the bears for the first time since September 2014.
So, the BTC bullsÂ need progress soon, else the 5-month MA will cut the 10-month MA from above (bearish crossover), confirming a long-term bullish-to-bearish trend change.
The short-term trend remains bearish as indicated by the downward sloping 5-day and 10-day MAs.
This, coupled with the bearish development on the hourly and monthly charts, indicates that bitcoin will likely find acceptance below key support at $8,270 (50-day moving average) and $8,207 (50 percent Fibonacci retracement of the rally from the April 1 low to May 5 high). In such a case, bitcoin risks falling below $8,000.
BTC looks set to take out support at $8,207 and could then drop to $7,787 (61.8 percent Fibonacci retracement of the rally from the April 1 low to the May 5 high) or even as low as $7,698 (61.8 percent Fibonacci retracement of the rally from the July 2015 low to the December 2017 high).
Bullish scenario : Another rebound from $8,207 and a break above $8,760 would open doors for a move back above $9,000. A daily close (as per UTC) above the 10-day MA, currently seen at $9,038 would confirm the sell-off from the recent high of $9,990 has ended.
Bitcoin and U.S. dollars Â image via Shutterstock
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