However, the breakout above the lateral resistance of $9,586 (Nov. 4 high) was short-lived and the cryptocurrency ended the day (UTC) on a flat note at $9,288.
Bitcoin’s price action of the last 24 hours is telling a tale of buyer exhaustion and hinting at a more major price pullback ahead.
The top cryptocurrency by market value jumped to three-month highs above $9,600 during Monday’s Asian trading hours, extending January’s 30 percent gain.
Put simply, the day began with optimism but ended on a pessimistic note, with buyers failing to establish a strong foothold above price resistance. This type of price action at multi-month highs and after significant rallies is indicative of bull fatigue and often precedes a reversal.
Bitcoin is feeling the pull of gravity at press time. The cryptocurrency is currently trading below the former resistance-turned-support of $9,188 (Jan. 19 high). The global average price, as calculated by CoinDesk’s Bitcoin Price Index, is seen at $9,170 – down 1.5 percent on a 24-hour basis.
Bitcoin created a classic doji candle with a long upper shadow on Monday, marking a bull failure at $9,586 (Nov. 4 high) and aborting the immediate bullish view.
The five-day moving average has topped out and is beginning to trend south, indicating a temporary bearish shift in momentum.
The MACD histogram is producing smaller bars above the zero line – also a sign of ebbing of bullish momentum.
Monday’s rejection above $9,200 reinforced the lower highs, or bearish divergence, of the RSI.
Additionally, the RSI has now dipped into bearish territory below 50 and the negative bars on the MACD histogram are indicating a downside move is about to gather steam.
Bitcoin risks falling to the 200-day average, currently located at $8,867. A UTC close lower could cause more sellers to join the market, leading to a deeper slide toward $8,500.
The overall trend, however, will remain bullish as long as prices stay above $8,000.
The case for a pullback to the 200-day MA would weaken if the four-hour chart RSI crosses the descending trendline, in which case the cryptocurrency could have another go at $9,600.
