- Bitcoin’s weekly Chaikin Money Flow index is reporting the strongest bearish bias since February. Other weekly chart indicators are also calling a deeper drop, possibly to levels below recent lows near $7,750.
- The daily chart indicators suggest the corrective bounce has ended and sellers are again gaining strength.
- The ongoing risk aversion in the global financial markets could weigh over bitcoin.
- The short-term bearish case would weaken if prices rise above the 200-day average, currently located above $8,700, although, as of now, that looks unlikely.
Bitcoin has faced its highest selling pressure since February in the last 24 hours and has potential to drop below recent lows near $7,750.
The top cryptocurrency by market value fell from $8,326 to $8,086 in the 60 minutes to 17:00 UTC on Tuesday, confirming a downside break of the recent trading range of $8,450–$8,250, as expected.
Since then, the cryptocurrency has stabilized around $8,100. Some observers are of the opinion that BTC has carved out a temporary bottom near $7,750 and the drop from levels above $8,300 could be a bear trap.
That argument is logical if we take into account the seller exhaustion signaled by a bullish divergence of the 14-day relative strength index – a widely used technical indicator – confirmed last week.
So far, however, that has failed to excite investors, as noted on Tuesday. Further, longer duration indicators continue to report bearish conditions.
For instance, the weekly Chaikin Money Flow (CMF) index, which incorporates both prices and trading volumes to gauge buying and selling pressure, is currently printing a value of -0.14 – the lowest since mid-February.