Bitcoin (BTC/USD) continued to fall over the weekend, breaking below a recent support around $6610 based on Coinbase price.
However, it found support quickly around $6450 and rebounded sharply, now trading around $7000 during the 4/2 morning US session.
I am not impressed with this rally so far, and think there is still a strong probability of further decline towards $6000.
BTC/USD 4H Chart
- First of all, in this 4H chart, price is still trading under the 200-, 100-, and 50-period simple moving averages (SMAs).
- Secondly, the RSI is still holding under 60, which reflects maintenance of the prevailing bearish momentum.
- Now some might say that there is a bullish divergence between price and the RSI. (Price made a new low while the RSI held a higher low.) This is true, and has been resolved. Meaning, the rally did materialize after the bullish divergence. But now we have to move on.
- The current signal might be a NEGATIVE REVERSAL. (price higher is lower while the RSI high is higher. This suggests another low is coming.
- I am not confident this next low will reach towards $6000 right away. I think we might actually start seeing choppy price action above $6000 instead of a sharp knife to this level.
- But as long as price is holding under the $7310 pivot, there is downside risk to $6000.