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Bitcoin risks a price pullback in the short-term, given the signs of bullish exhaustion around $8,300.

A UTC close below $7,581 would validate a bearish “hammer candle” created on Monday and open the doors for a drop to the 30-day moving average, currently at $6,333.

The case for a pullback would weaken if BTC settles above $$8,200 today, invalidating the hammer candle.

Both the daily and 4-hour charts also indicate scope for a price pullback.

Bitcoin (BTC) has failed three times in seven days to find acceptance above $8,300, raising the risk of a notable short-term correction.

The cryptocurrency market leader jumped nearly 13 percent to a high of $8,300 on Sunday, reviving the case for a rally to $8,500 (July 2018 high), as discussed yesterday.

So far, however, the follow-through has been bearish. BTC is currently flatlined above $7,900 on Bitstamp, having hit lows below $7,600 in the early U.S. trading hours yesterday.

Notably, the pullback seen in the last 36 hours marks BTC’s third failure in the last seven days to capitalize on a rally to $8,300.

Prices rose to a high of $8,335 on May 14, only to register a UTC close at $7,986. On similar lines, BTC faded the spike to $8,390 on May 16 and closed the day in the red at $7,880.

The triple rejection comes after a sharp rally from lows near $5,100 seen at the end of April and could be considered a sign of buyer exhaustion. As a result, a fall back to $7,200–$7,000 could be seen in the next day or two.

Daily chart

BTC created a bearish “hanging man” or a hammer candle on Monday, which occurs when the price closes in the red, despite a “buy the dip” mentality. The cryptocurrency recovered from the intraday low of $7,581 yesterday, but closed 2.3 percent lower on the day at $8,005.

Put simply, the bears are beginning to test the bulls’ strength and the market may be topping out for the short-term.

A temporary bullish-to-bearish trend change would be confirmed if the price closes today below $7,581 (candle low). That looks likely, given the repeated rejections at $8,300 in the last seven days.

A close below $7,581 would open the doors for a deeper pullback to the historically strong 30-day moving average (MA) support, currently at $6,333.

The bearish hammer would be invalidated if prices find acceptance above $8,200 in the next 24 hours. In that case, BTC may rise to $8,500 as suggested by the bullish longer-duration charts.

4-hour chart

As seen above, BTC picked up a strong bid near $7,300 and jumped to $8,000 in the Asian trading hours on May 19.

With the price rally, both the relative strength index and Chaikin money flow (CMF) invalidated bearish divergences by moving above their respective falling trendlines.

A failed bearish indicator divergence is often followed by a big move to the higher side. As mentioned, though, BTC only managed to retest $8,300 before falling back below $8,000, indicating buyers are exhausted after engineering a $3,000 rally in just two weeks.

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

Bitcoin image via Shutterstock; technical charts by Trading View