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Dead Cat Bounce? Bitcoin May Struggle to Hold Above $7K

Bitcoin (BTC) is looking to regain poise after its drop to two-month lows on Sunday, but the recovery will likely be short-lived, the technical charts indicate.

At press time, BTC is changing hands at $6,825 on Bitfinex – up 3 percent from the two-month low of $6,619.

The recovery could be associated with extreme oversold conditions highlighted by the relative strength index (RSI) yesterday and could be extended further in the next 24 hours.

However, crossing $7,000 in a convincing manner will be easier said than done, as the area around the psychological hurdle is packed with key technical resistance lines. Further, the long duration charts have turned bearish, so holding on to gains above $7,000 will be a challenge for BTC's bulls.

Hence, the recovery could turn out to be a dead cat bounce – a temporary recovery in a bear market that is followed by a resumption of the downtrend.

Daily chart

On the way higher, BTC could face stiff resistance at May 29 low of 7,040 (former support turned resistance). Interestingly, the pennant floor (former support) is also lined up at $7,040.

Further, a key Fibonacci retracement level is located around $7,000, as seen in the chart below.

Hourly chart

The 38.2 percent Fibonacci retracement of the latest leg down in prices is $7,008.

What's more, the cryptocurrency is struggling to find acceptance above $6,859 (23.6 percent Fibonacci retracement). The failure to beat a less important Fibonacci hurdle only indicates how tough it could be for bitcoin to scale $7,008 (38.2 percent Fibonacci hurdle).

The bearish moving averages could also complicate the recovery in bitcoin prices. The 50-hour, 100-hour and 200-hour moving averages (MAs) are all trending south indicating a bearish setup.

Meanwhile, the long duration charts are biased to the bears too.

Monthly chart

The bearish crossover between the 5-month and 10-month MA also indicates the tide has turned in favor of the bears.

Weekly chart

As discussed yesterday, the downside break of the pennant pattern has revived the bear market and opened the doors for a drop below the February low of $6,000. The pennant breakdown also adds credence to BTC's bearish close below the 50-week MA in May.

And, last but not the least, the charts also show there is a lot of space to the downside as a major support is seen directly at $6,000 (Feb low). A violation there would open up downside towards $4,496 (100-week moving average) and $3,300 (trendline drawn from the August 2015 low and March 2017 low).

View

  • A minor corrective rally could be in the offing, but will likely run out of steam above $7,000.
  • The broader outlook remains bearish with bitcoin likely to test $6,000 in a week or two.
  • Only a daily close (as per UTC) above the 10-day MA, currently seen at $7,376, would abort the bearish view.

Chinese cat statues image via Shutterstock

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With every slide in the cryptocurrency market, Bitcoin dominance increases. As a matter of fact, Bitcoin ball park control stands at 40 percent in the last seven days or so. That’s when bears took more than $30 billion despite supportive news from the SEC. Going forward, it could be worse for cryptocurrency portfolios because any break below $6,000 and we might see BTC valuation dropping 85 percent from its ATHs to $3,000. Let’s have a look at these charts: From the News It is attack after attack but in the case of BitGrail, ordinary account holders are set to suffer. A while back, this Italian exchange was hit by hackers who made away with $187 million worth of Nano coin. Even though the operations of the exchange took a hit, they resumed normal services a few days later. However, with formal announcement by the exchange that they were not in a position to reimburse user funds because they strongly believe hackers took advantage of Nano’s blockchain weakness, the Nano Foundation refutes these claims. We have temporarily disabled the BitGrail exchange pending further notice. — BitGrail Exchange (@BitGrail) May 2, 2018 This inevitably means the court is the only center of arbitration and now through the orders of a Florence Court, where bankruptcy petition for BitGrail is on-going, BitGrail’s digital assets are under state custody. We cannot make solid conclusion as the hearing continues. 3000 users of the #BitGrail fiasco have filed a petition asking an Italian court to declare the entities that operated the Bitgrail exchange bankrupt.https://t.co/x3wfor4qe1 — DeusExMachina (@d1rtydan) April 27, 2018 Then again the CEO of BitGrail has been clear that there is nothing since the exchange is following court orders. Regardless, it’s clear that the exchange is in a poor financial situation and probably won’t repay victims. As litigation continues in Italy, authorities in South Korea are planning on creating a special economic zone for blockchain companies in the city of Busan. “We need a place to concentrate on the cryptographic industry in Korea like the Crypto Valley in Switzerland” This comes at the back drop of the country’s initial steps of totally banning ICOs and fostering an environment that isn’t supportive for crypto traders in general. #SouthKorea intends to launch a #blockchain center in Busan city to incubate companies and projects working in the sector. Modeled as “#Crypto Beach,” the development is reportedly inspired by Switzerland’s “Crypto Valley” in Zug.#Bitcoin #btc $btc $bitcoin #ETH #EOS #ICX — Hitman (@Hitman637) June 17, 2018 Because of this, most blockchain start-ups in South Korea offer their ICOs in other countries. So, to prevent loss, the only approach is to thaw their regulatory grip by creating such blockchain friendly zones. Of course, all things constant, this is positive for Bitcoin in the long haul. Bitcoin (BTC) Technical Analysis Weekly Chart Bitcoin Weekly Chart by Trading View Talking of Bitcoin hitting $3,000 may be pessimistic but here is the thing: Any break below $6,000 this week or within the next month and it would be catastrophic for coin holders in general. The web might even spread considering the positive correlation between Bitcoin prices and altcoins as we have been seeing in the last couple of days. Besides, even Trustory CEO thinks BTC prices are yet to bottom out and unwind the effect of Q3 and 4 2017 Tether pump. Price wise, it’s clear that BTC prices are trending around a key inflection point, a double bottom as the weekly chart shows. Overly, bears are in charge and we can draw a simple trend line between Q1 and recent Q2 highs to demonstrate that. In our previous projections, any up-thrust that lifts BTC prices above $8,000 will mean bulls are in charge and buying in line with the new shift of trend is practical. Conversely, it will be a journey back to $3,000 if sellers break below $6,000 as we have mentioned before. Daily Chart Bitcoin Daily Chart by Trading View Announcement by the SEC on June 14 was by all means timely. As we can see from the daily chart, that’s right at the main support line and initial bear targets at $6,500. Now, our trade plan based on these new events proposes buying but only when buyers push prices ideally past $7,000 and for conservatives at $7,800. Of course, with the past three candlesticks moving within tight trading ranges, patience would be an asset and would mean buying only once our trade conditions are met. On the reverse side where sellers drive below $6,000 and it would be a slide to $3,000. The post “Bitcoin (BTC) Prices Yet To Hit Rock Bottom”: Bitcoin (BTC) Technical Analysis (June 18, 2018) appeared first on NewsBTC.

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