Trading Bitcoin: Failed Reaction Rally, More Declines Coming?

Daily

On the daily chart above, Bitcoin has been rejected after its recent reaction rally. While the sequential indicator is in a recycle period, it is technically on a red 5 candle. Therefore, bearish price action is likely to continue with price below $7.2k.

4 Hour

The 4 hour chart is currently on a sequential red 3 candle. When our current red 3 candle broke below the previous red 1, a short trade was activated on the 4 hour timeframe. If Bitcoin cannot break above its previous lower high, a further decline to the $6k price level is likely.

Weekly

Sequential has given us a red 2 candle on the weekly chart above. In sequential theory, a red 2 closing below the previous red 1 is an indication to place a short trade. However, we prefer not to short a red 2 when the red 1 candle is a bearish engulfing candle. This is because the majority of the the move has already been made.

Conclusion

We remain in a bearish downtrend. Current support stands at $6.8k while resistance remains at $7.2k.