Bitcoin Looks South After Strong Rejection Above $7,600

Bitcoin risks falling to key support near $7,087 with charts indicating bearish sentiment is still quite strong.

Bitcoin is again operating on slippery ground, having faced repeated rejection above psychological resistance over the last four days.

The top cryptocurrency by market value has failed to hold onto gains above $7,600 in three out of the last four days.

Monday's rejection above the psychological level appeared most disheartening for the bulls.

The cryptocurrency ended the day with a 2.4 percent drop, engulfing the trading range seen over the last three days.

Bitcoin has dived out of an ascending trendline, confirming an end of the corrective bounce from the six-month low of $6,500 seen on Nov. 25.The downside break is backed by a bearish below-50 reading on the relative strength index.

The bearish case would weaken if prices manage to rise above $7,666, invalidating the big red hourly candle with a long upper shadow created Monday.

Any breakout above $7,666 needs to be backed by strong buying volume to have staying power.

Bitcoin created a bearish "Outside day" candle on Monday.

Monday's outside day has engulfed the preceding three days' price action and invalidated an upside break of the descending trendline confirmed on Dec. 6.