Following yet another record high at the weekend, bitcoin is trading on the back foot today.

The world’s largest cryptocurrency rose to fresh all-time high of $7,601.39 on Sunday, as per CoinDesk’s Bitcoin Price Index (BPI). However, the pop was short-lived, and prices soon fell back below the previous record high of $7,454.05 recorded Nov. 3.

Notably, this is the third time in the last week that BTC has failed to hold above $7,400, despite having clocked a new high.

So what’s stopping the bulls from attacking the $8,000 mark? Though the exact cause is unclear, the following factors could be behind the trader reticence above $7,400.

To start with, comments on social media indicate investors are seeing the likelihood of a short-term pullback, and the resulting caution may have weakened the bid tone.

Further, the realization may have seeped into the market that the upcoming Segwit2x hard fork may not mean free money. As detailed in our explainer, the introduction of Segwit2x looks increasingly unlikely to be a success, and fears over potential issues may be increasing as we near the fork date.

At the time of writing, the bitcoin-U.S. dollar exchange rate (BTC/USD) is at $7,395 levels. As per CoinMarketCap, BTC has dropped around 2 percent in the last 24 hours. Despite repeated failure to hold above $7,400, the dips below $7,200 have been short-lived.

Still, there is merit in being cautious, as the price action analysis indicates that a potential bearish reversal pattern could be in the making.

Bitcoin chart

The above chart shows:

Bearish price – RSI (relative strength index) divergence has been confirmed

Prices failed to take out the 4-hour 50-MA level of $$7,425

4-hour 50-MA has topped out (i.e. it has shed bullish bias).

View

The bearish price-RSI divergence, with the failure to take out 4-hour 50-MA today and the fact that the moving average has topped out, indicates potential for a drop to $7,044 (head and shoulders neckline).

A 4-hour close below $7,044 would signal that the rally from the low of $5,376 (Oct. 25 low) has topped out and could yield a much needed healthy correction to $6,400 – $6,189 (Oct. 21 high).

On the higher side, consolidation around $7,500 could translate into a fresh rally to $8,000 levels.

Eraser image via Shutterstock