Rangebound: Bitcoin Bulls Need Break Above $7.5K

Despite the retreat, the immediate outlook remains neutral, with bitcoin stuck within a narrowing price range.

A downside break would revive the sell-off from $9,050 and allow a drop towards $5,950.

Amid the unwinding of the long positions mentioned above, bitcoin created a bearish outside-day candle on Monday , indicating that the corrective rally from the Friday's low of $6,500 has ended.

The candlestick pattern suggests that the cryptocurrency will likely breach the narrowing price range to the downside and extend losses towards $6,000-$5,950.

On the other hand, if bitcoin breaks out of the narrowing price range with an upside move, the odds of a falling wedge reversal would improve.

A high volume close above $7,200 would confirm a bullish falling wedge reversal stiff resistance is lined up at $7,510.

As a result, traders would want to see a break above $7,510 before calling a bullish reversal.

A downside break of the narrowing price range would open the doors to $6,000-$5,950.

An upside breakout of the triangle pattern could see bitcoin chew through supply around $7,200, confirming a falling wedge reversal and allowing a rally to $7,500.

Only a close above that level would confirm the short-term bullish trend reversal.