- Bitcoin defends key support above $8,000; reversal from the 200-day MA is likely.
- A falling wedge pattern could elevate Bitcoin closer to $10,000.
Bitcoin has shown resilience by bouncing off key support. In the short-term this a signal for a minor reversal to the upside. However, affinity to declines will remain high as long as BTC/USD is unable to rise above the zone around $9,000.
Following the devastating 10% drop on Tuesday, Bitcoin opened the Pandora box paving the way for a transition from a bullish trend to a bearish trend. The next target on the downside is $7,200.
The daily chart shows dips below the 200 moving average (MA) having been averted or short-lived. At the moment, BTC is exchanging hands around $8,400 on Coinbase. Still defending the $8,000 support is the 200-day MA.
BTC/USD daily chart
A broader look at the chart also shows Bitcoin still holding in the confines of a falling wedge pattern. This presents a catch-22 situation where a bounce off the support could push Bitcoin into a magnificent breakout towards $10,000. On the other hand, if Bitcoin finds its way below the wedge pattern, buyers could be in for another rollercoaster ride below to $7,200 and below.
From a short-term perspective, Bitcoin has a bearish bias. The moving average convergence divergence (MACD) displays a strong negative picture. The wide divergence signifies the control the bears have on the price. On a brighter side with reducing volume, the dips are likely to be shallow.
The biggest task for the bulls in the short-term is to put Bitcoin a leash around $8,400 support. From here an assault on $8,500 support would be easier to stage.
Bitcoin Key Technical Levels
Spot rate: $8,391
Relative change: -47
Low: $8,321.16 Trend: Generally bearish.
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