Bitcoin Price Drops Back Below $4K But Bull Outlook Still Intact

View Bitcoin failed to capitalize on a bull breakout above $4,040 yesterday, but the short-term outlook remains bullish as the higher-lows pattern is still intact.

A convincing break above the three-day chart resistance of $4,040 still looks likely and could be followed by a rally toward the recent high of $4,190.

The immediate outlook would turn bearish if prices find acceptance below $3,920.

Bitcoin has dropped back from levels over $4,000, but the short-term outlook will remain bullish as long as prices are holding above key support at $3,920.

The breakout above the crucial three-day chart resistance of $4,040 was short-lived with prices falling back to a five-day low of $3,920 before closing the day at $3,974.

Notably, the negative price action engulfed the trading range seen in the previous four days, which is widely considered an early sign of bull exhaustion.

That said, the path of least resistance is still to the higher side, as the bounce from lows near $3,920 has left the bullish higher lows pattern intact along the trendline connecting the Feb. 8 and Mar.4 lows.

For the immediate outlook to turn bearish, the engulfing price action seen yesterday needs a strong follow through in the form of a convincing break below $3,920.

A bullish-to-bearish trend change would be confirmed only if prices close below $3,920 today.

A move below $3,920 would confirm a downside break of the ascending trendline and shift risk in favor of a deeper drop toward the Feb. 27 low of $3,658.