Support Forming? Why $7.9K Is Bitcoin's New Price to Watch

Bitcoin remains in a bullish territory for now and is looking at further gains, though a pullback is possible if support at $7,900 is breached, according to technical studies.

The cryptocurrency's first attempt to scale the long-term descending trendline (drawn from the Dec. 17 high and Jan. 6 high) failed on Monday and prices fell below $8,000 as expected at 12:00 UTC.

It's worth noting that the Bollinger bands (seen on the chart below) show the volatility dropped after BTC dipped below the psychological mark, likely signaling indecision among the bears. As a result, it is not surprising the dip below $8,000 was short-lived.

As of writing, BTC is changing hands at $8,145 on Bitfinex, largely unchanged on a 24-hour basis, but could soon report further gains as the hourly Bollinger bands indicate scope for a retest of $8,400–$8,500.

Hourly chart

The Bollinger bands (+2 and -2 standard deviations from the 20-hour moving average) narrowed after the dip below $8,000, indicating the low volatility period – popularly known as a Bollinger band squeeze.

The 19-hour squeeze ended with a bullish breakout. Additionally, the hourly relative strength index (RSI) is above 50.00 and trending north, also indicating a bullish setup. So, BTC could have another attempt at breaching at the trendline resistance seen today at $8,420.

However, a failure to capitalize on the bullish Bollinger breakout could yield a drop below $7,900 (previous day's low). In such a case, BTC will likely test 4-hour 200 MA lined up at $7,690.

That said, the outlook as per the daily chart still remains bullish.

Daily chart

Only a daily close below $7,510 (double-bottom neckline/former resistance turned support) would abort the bullish view.

Meanwhile, a dip to $7,690 will likely find bids as the short-term momentum studies are biased bullish. The 5-day MA and the 10-day MA continue to slope upwards (bullish).

View

• Bitcoin could revisit the descending trendline resistance seen today at $8,420. A daily close (as per UTC) above that level would confirm a long-term bearish-to-bullish trend change.
• On the downside, a move below $7,900 could yield a fruther drop to $7,690.
• A daily close below $7,510 would signal the rally from the April 1 low of $6,425 has ended.

Bitcoin on rail via Shutterstock