- Bitcoin struggles to defend $7,800 following a reversal from highs close to $8,500.
- The technical picture suggests that further declines are inevitable.
The cryptocurrency market is retracing from the highs recorded this week. The entire market is down $9 billion amid a selloff that was anticipated by many analysts. Bitcoin’s surge to levels close to $8,400 revived the hope of seeing it above $9,000 in the first month of 2020. Besides, the bullish correction was an extension of the movement from the lows posted in December at $6,550.
At the time of writing, BTC/USD is doddering at $7,872. This flows a reversal that failed to hold above $8,000. It is clear that if the support at $7,800 caves in, the price could spiral towards $7,000 in a bid to create demand and build proper fundamentals for a rally targeting $9,000.
The ongoing bearish momentum is supported by the Relative Strength Index (RSI) which is currently testing the support at 50 (average). If the downtrend continues, BTC/USD could gain momentum below $7,800.
BTC/USD 4-hour chart
On the other hand, the price is still above the moving averages. The 50 MA on the 4-hour chart (marginally above $7,500) is in position to cushion the drop. The 100 MA currently at $7,387 is in line to provided support as well.
On the brighter side, the gap between the 50 MA and the 100 SMA keeps increasing to that buying pressure is also present. In this case, the bulls must work to defend the zone at $7,800 and focus on pulling the price above $8,000 in the near term. This will allow them enough time to gather their strength in readiness for another attack on $8,500.
Bitcoin Key Technical Levels
Spot rate: $7,855
Relative change: -189
Percentage change: -2.36%
RSI: Downward slopping hints building bearish momentum.
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