Bitcoin’s (BTC) weekly gains were wiped out at the weekend at a key moving average that previously offered support.

The leading cryptocurrency by market capitalization jumped to highs above $6,750 on Saturday, having weakened the immediate bearish case with a repeated defense of the psychological support level of $3,500 last week.

BTC, however, failed to secure a UTC close above the 21-day MA. More importantly, rejection at that MA hurdle proved costly – BTC fell 3.8 percent to $3,470 yesterday.

So, it could be argued that the MA line, which served as strong support in the two weeks leading up to Jan. 10, has now taken on the role of stiff resistance.

As of writing, BTC is changing hands at $3,527 on Bitstamp, representing a 4.30 percent drop on a 24-hour basis. Meanwhile, the 21-day MA is seen at $3,732.

The strong pullback from the 21-day MA indicates that the “sell on rise” mentality is still quite strong. After all, the primary trend is still bearish, as represented by the downward sloping 10-week moving average (MA).

The probability of a sustained break below $3,500 remains high while BTC is held below the newfound resistance of the 21-day MA.

Daily chart

As seen above, BTC failed at the 21-day MA on Saturday and fell back to $3,500, reinforcing the bearish view put forward by the downward sloping 5- and 10-day exponential moving averages (EMAs) and the 14-day relative strength index (RSI) of 42.00.

As a result, the probability of a drop below $3,500 has increased. That would only bolster the bearish technical setup and open the doors to December lows near $3,100.

However, the bearish case would weaken if BTC secures a UTC close above the 21-month MA of $3,732.

Weekly chart

The long upper shadow (spread between high and close) attached to last week’s candle represents the “sell on rise” trader mentality – after a quick rise, a selloff erased the gains.

The primary trend remains bearish as long as BTC is trading below the downward sloping 10-week MA.

View

BTC’s pullback from the 21-day MA may embolden the bears to push prices below $3,500. Acceptance below that level would expose the December low of $3,122.

A convincing move above the 21-day MA of $3,732 would weaken the bearish case and open up upside towards $4,000. However, the primary trend is bearish, so forcing a move above the 21-day MA could be a tough task for the bulls.

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

Bitcoin image via Shutterstock; charts by Trading View