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Bitcoin suffered its lowest UTC close in over seven weeks on Wednesday, reinforcing the bearish view put forward by the rejection at the 50-candle moving average (MA) on the 6-hour chart yesterday. The close at multi-week lows also dashed hopes of a falling wedge breakout. The cryptocurrency also created a bearish outside reversal candle on the daily chart yesterday, opening the doors for a drop to falling channel support at $3,230. A strong move above the 50-candle moving average on the 6-hour chart, currently at $3,434 will likely weaken bearish pressures and yield a corrective bounce to the resistance near $3,650.

With bitcoin (BTC) closing yesterday at the lowest level in 7.5 weeks, the gradual sell-off is showing no signs of abating.

On Wednesday, the leading cryptocurrency by market value ended the session (as per UTC) at $3,328 – the weakest daily close since Dec. 16 – according to Bitstamp data, dashing hopes of an upside break of the falling wedge pattern carved out over the last six weeks.

Further, BTC created a bearish lower high at the crucial resistance of the 50-candle moving average (MA) on the 6-hour chart. That average line has thwarted several fledgling rallies over the last three weeks, as discussed yesterday.

As a result, the slow drip sell-off from December highs above $4,200 witnessed over the last six weeks is likely to continue. BTC could soon challenge recent lows near $3,300 and may extend the decline toward the low of $3,100 seen in December.

At press time, BTC is trading largely unchanged on the day at $3,380.

Daily chart

As seen above, yesterday’s high and low engulfed Tuesday’s price action as indicated by a bearish outside candle. Effectively, the day began with optimism but ended on a pessimistic note, meaning the “sell-on-rise” mentality is still strong.

Hence, the cryptocurrency risks falling to the descending channel support, currently at $3,230.

Supporting that bearish case are the 14-day relative strength index of 38 and downward sloping 20-day moving average (MA).

6-hour chart

On the 6-hour chart, the 50-candle MA has proved a tough nut to crack for close to three weeks. A convincing break above that average, currently at $3,434, might lead to a stronger rally toward resistance at $3,658 (high of the bearish gravestone doji created Jan. 26).

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View