Bitcoin on the Defensive But May See Bounce at Key Price Support

Bitcoin is looking south, as per the bearish divergence of the 14-day relative strength index and other short-term technical indicators.

Bitcoin's short-term prospects are looking bleak, but its close proximity to a historically strong price support level calls for caution on the part of the sellers.

That said, investors looking to buy at lower levels may be left disappointed if the 30-day moving average, which consistently applied brakes on price pullbacks in March, again fuels a strong bounce.

While the 30-day MA had served as strong resistance in January, on Feb. 8, BTC confirmed seller exhaustion by establishing a bullish higher low and closing well above the 30-day MA after a 7.8 percent rise.

The newfound support has reversed price pullbacks ever since.

The chart reveals BTC has established bullish higher lows along the 30-day MA throughout the recent rally, from lows near $3,300 to highs above $5,600.

Further, the long-term bullish breakout witnessed on April 2 was preceded by a higher low formation on the 30-day MA on March 26.

A bounce from that average would abort the short-term bearish view and could yield re-test of $5,627.

Any break below the 30-day MA would validate the bullish exhaustion signaled by the weekly candle and open the doors to deeper price pullback.

The long-term outlook will remain bullish as long as the price is holding above the former resistance-turned-support of $4,236.