Bitcoin Faces Drop to $7K as Bull Defense Crumbles

Bitcoin is trading on the defensive today, having dropped 16 percent over the last three days.

The cryptocurrency closed at $7,494 yesterday - its lowest daily close since April 12 - and looked oversold as per the relative strength index in the hourly and 4-hour chart.

A resulting corrective rally ran info offers above $7,700 earlier today and prices fell to a 6-week low of $7,352 at 08:30 UTC. The failure on the part of the bulls to produce a notable corrective rally despite oversold conditions indicates that bearish sentiment is currently strong.

The downside break of the bear flag, a bearish continuation pattern, indicates the minor corrective rally from the low of $7,402 has ended and BTC could drop to $7,000.

The relative strength index has dropped close to the oversold region, but is holding well above the lows seen yesterday, indicating there is enough room for a drop to $7,000.

BTC closed yesterday below $7,787 in a convincing manner, signaling a bullish-to-bearish trend change.

View BTC will likely find acceptance below the immediate support seen at $7,188 and drop to the $7,000 mark in the next 24 hours.

The RSI in the hourly and 4-hour chart will likely have dropped below 30.00, indicating oversold conditions, meaning BTC may defend the psychological support level of $7,000.

On the higher side, only a daily close above the 10-day MA, currently seen at $8,111, would abort the bearish view.

Only a daily close above $8,644 would signal a bearish-to-bullish trend change.