The bitcoin market has come alive in the last 36 hours, with the bears gaining the upper hand and now aiming for fresh 2018 lows below $6,000.

The cryptocurrency dropped nearly 10 percent on Sunday, hitting a two-month low of $6,619 on Bitfinex, having spent the last two weeks trading in the narrow range of $7,000–$7,800.

Across the media, the price drop has been put down to a hack on South Korean exchange Coinrail, revealed Sunday, and renewed concerns regarding security at cryptocurrency exchanges.

However, a big move was expected anyway – as an extended period of consolidation or low volatility is often followed by a sharp move on either side – and prices started falling Saturday, so the theft of ERC-20 tokens at a minor exchange seems an unlikely cause.

Either way, the technical studies now spell trouble for bitcoin. The convincing move below $7,000 marks a downside break of the four-month-long narrowing price range and has opened the doors for a drop below $6,000 (Feb. 6 low).

As of writing, BTC is changing hands at $6,773 on Bitfinex – down 6.4 percent in the last 24 hours.

Weekly chart

The cryptocurrency created a pennant in the last four months, signaling that the sell-off from the December record high of $19,891 had ended at $6,000.

An upside break of the pennant would have signaled a long-run bearish-to-bullish trend change. However, prices closed (as per UTC) well below the pennant support yesterday, implying a downside break of the pennant pattern and a resumption of the sell-off from the December high.

The chart also shows a bearish crossover between 5-week and 10-week moving averages (MAs). The relative strength index is also biased bearish (below 50.00).

So, bitcoin looks set to extend the decline over the next couple of weeks. On the downside, support is seen at $6,000 (February low), $4,496 (100-week moving average) and $3,300 (trendline drawn from the August 2015 low and March 2017 low).

While the bears appear to be in control, minor corrective rallies could be seen, as the cryptocurrency looks oversold as per short duration chart studies.

4-hour chart

The extreme oversold conditions as shown by the relative strength index could put a temporary bid under bitcoin. However, the long-term bearish breakdown as seen in the weekly chart will likely restrict the corrective rally to around $7,200.

View

The pennant breakdown (bearish continuation pattern) indicates that bitcoin could drop below $6,000 in a week or two and may extend the losses to the 100-week MA of $4,496 over the following weeks.

A minor corrective rally to $7,000–$7,240 could be seen in the next 48 hours before further sell-off.

Only a daily close (as per UTC) above the 10-day MA, currently located at $7,444, would abort the bearish view.

Bitcoin and chart image via Shutterstock