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Bitcoin is on track to test $9,000, having dived out of a narrowing price range earlier this week. The cryptocurrency is likely to end August on a negative note, having suffered losses in July and January.

BTC may suffer a deeper price drop over the next few months, possibly to the 200-day moving average near $7,400, if prices print a UTC close below $9,049 on Saturday, confirming a bearish reversal on the monthly chart.

A minor price bounce, possibly to the Aug. 22 low of $9,755, could be seen before a drop to $9,000, as an hourly chart indicator is reporting bullish conditions.

The short-term bearish case would be invalidated if prices find acceptance above $10,280 (Wednesday’s high), although that looks unlikely. A weekly close (Sunday, UTC) above $12,000 for bullish revival, as discussed earlier this month.

Bitcoin (BTC) looks set to register its third monthly loss of the year with a moderate price drop in August.

The leading cryptocurrency by market value is currently trading at $9,600, representing a 4.8 percent drop on the opening price of $10,096 observed on Aug. 1, according to Bitstamp data.

If prices remain below $10,096 till Saturday’s UTC close, then it would be the third monthly loss of 2019. BTC fell 7.59 percent and 6.27 percent in January and July, respectively, as seen in the chart below.

Bitcoin’s five-month winning run – the biggest since August 2017 – ended last month.

January’s 7.59 percent decline was the sixth consecutive monthly drop – the longest losing streak on record.

It is worth noting that the monthly close (Saturday, UTC) is still 37 hours away and the cryptocurrency is currently down just $586 from the monthly opening price of $10,096.

In the past, BTC has moved violently by $1,000 or more in a matter of just a few minutes. For instance, prices rose from $9,300 to $10,400 in 30 minutes during the U.S. trading hours on July 18.

So, the possibility of BTC finding acceptance above $10,096 before Saturday’s UTC close cannot be ruled out. That would amount to a monthly gain.

Technical charts, however, indicate the sellers are in control and prices are more likely to end the month with losses.

3-day chart and hourly charts

The contracting triangle breakdown seen in the three-day chart (above left) indicates a bullish-to-bearish trend change.

The three-day chart relative strength index (RSI) has also dropped below 50 for the first time since mid-March. A below-50 print indicates bearish market conditions.

The Chaikin money flow, which incorporates both prices and trading volumes, has found acceptance below the zero line, a sign of increasing selling pressure.

All-in-all, the path of least resistance appears to be on the downside and the cryptocurrency may drop to the psychological support of $9,000 in the next 24 hours or so. A violation there would expose the ascending 50-candle moving average (MA) support, currently lined up at $8,738.

A slide to $9,000, however, could be preceded by a minor price bounce to the former support-turned-resistance of $9,755 (Aug. 22 low), as the RSI on the hourly chart (above right) has moved into the bullish territory above 50.00.

While the hourly RSI has turned bullish, the stacking order of the 50-hour MA, below the 100-hour MA, below the 200-hour MA is a classic bearish signal. So, these averages, currently located at $9,648, $9,932 and $10,048, will likely offer strong resistance.

Monthly chart

BTC created an “inside bar” pattern in July, with the monthly high and low of $13,200 and $9,049, respectively, falling within June’s trading range of $13,880 to $7,432.

Essentially, the inside bar setup represents a narrowing price range characterized by higher lows and lower highs – a sign of an indecisive market or consolidation.

A convincing break below the inside bar’s low (range breakdown) is widely considered a sign of bearish reversal.

So, July’s low of $9,049 is the level to beat for sellers. A monthly close below that level would imply a long-term bullish-to-bearish trend change and shift risk in favor of a drop to the 200-day moving average (MA), currently at $7,468.

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

Bitcoin image via Shutterstock; charts by Trading View