Bitcoin traders seem a touch tentative today.

At press time, the bitcoin-U.S. dollar (BTC/USD) exchange rate is at $7,200 levels. BTC prices dropped to a four-day low below $6,950 yesterday before regaining poise, although the 5-day moving average (located above $7,200) is proving tough to crack.

So has the pullback run out of steam? Comments on social media indicate that, while some traders see the potential for a healthy correction to $6,500, others predict the market is likely to stay volatile ahead of the expected Segwit2x hard fork.

The odds seem high that the pullback has legs, given that the sell-off on Monday was backed by a 30 percent surge in volumes. A high-volume price drop usually means the investors sold in large quantities and is considered a negative indicator.

However, Google search volumes have declined over the last 18 hours, perhaps validating the argument that the retreat from the record highs is anything but “panic selling.” Search volumes tend to go up during such events as investors scout for information.

Meanwhile, the price action analysis indicates bitcoin is likely to witness consolidation with downside bias over the next couple of days.

Bitcoin chart

The above chart shows:

Bearish doji reversal

Relative strength index (RSI) is still overbought

5-day MA is offering strong resistance

A confluence of 10-day MA and the trend line support at $6,868.

A bearish doji reversal occurs when a doji candle (one with a virtually equal open/close price) is followed by a negative price action on the following day. On the above chart, Sunday’s doji candle was followed by a big red candle on Monday.

View

The doji reversal confirmation indicates the stellar rally in BTC may have run out of steam, and that prices could drop to $6,868 and $6,500 levels in the next couple of days.

However, dips below $6,868 are likely to be short-lived, given the 10-day MA still favors the bulls (slopes upwards).

On the higher side, only a sustained move above $7,500 would open doors for a rally towards $8,000.

Bouncing ball image via Shutterstock