• Bitcoin reignites the down on reaction to the rising wedge pattern break.
• The bulls must defend $7,200 for dear life or less the price spirals back to $6,500.

BitMEX margin trading is a pacesetter in the cryptocurrency market. According to the data by Datamish, a crypto platform that monitors data on BitMEX and makes a chart presentation, XBT/USD has seen 979,000 longs positions liquidated in the last six hours. At the same time, a mere 62,000 shorts positions have been liquidated in the same period.

The 2-hour chart clearly shows the contract trying to reverse the downtrend that has befallen it since the highs around $13,800 in June. The pressure on key support areas in November forcefully smashed towards $6,000. Fortunately, the high congestion of buyers at $6,500 saw Bitcoin reverse the trend not only stepping above $7,000 but also testing the resistance at $7,900.

Despite the recovery, the presence of the bears has remained to be a pain for the bulls. For instance, the retracement from the recent high at $7,854 continues to trim gains towards $7,000. The price has also corrected below the 100 Exponential Moving Average (EMA) and the EMA 50.

It is apparent that the break below a short term rising wedge pattern could spur more action to the downside further endangering $7,000. A return to $6,500 or even $6,000 still looms because Bitcoin is yet to find formidable support also known as a bottom.

According to the Relative Strength Index, Bitcoin has a bearish bias in the short term. The RSI is grinding towards the oversold as sellers tighten their grip. If $7,200 gives in, Bitcoin could easily spiral towards $6,500.

BitMEX Index price: $7,183

Volume: $1.9 billion

Volatility: Expanding

Trend: Strongly bearish

Support: $7,200, $6,800 and $6,500

Resistance: $7,400 and $7,700