Bitcoin has made a 5.5% move to the downside this morning following a swift rejection from the 200 exponential moving average on the daily chart.
Despite rallying to re-test the $8,800 level of resistance just after the daily candle close, Bitcoin is now dangerously close to a major correction to the downside.
The next logical stopping point for Bitcoin will be at around the $8,000 region, which provided a brief level of support between September 24 and October 9.
If the $8,000 line gets taken out, Bitcoin will face a sharp drop into the lower $7,000’s with $7,400 being a key level of support throughout the 2018 bear market.
One key indicator for a significant move to the downside will be the seemingly inevitable death cross on the daily chart.
Currently, the 50 EMA is sloping down towards the 200 EMA at an alarming rate. The previous occasion when the two moving averages crossed was on April 29, which proceeded a 193% move in price over two months.
If the death cross comes into fruition it would almost certainly highlight the early stages of a bear market as optimism slips out of the grasp of the relentless Bitcoin bulls.
A bearish cross of the EMAs would likely send Bitcoin back to test the $5,900 level of support. This was a key level throughout the previous bear market and will provide a vital platform for a bounce.
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