Bitcoin sticks to modest gains above $7000 in choppy session

Following yesterday's $400 drop, the BTC/USD pair recovered above the $7000 mark and traded in a relatively tight range on Tuesday amid a lack of fresh catalysts. At the moment, the pair is at $7030, adding 1%, or $70, on the day.

The trading action suggests that investors are refraining from making large bets before they see the reaction to the upcoming software update, which is expected to happen in about a week. In an article written for coindesk.com, Omkar Godbole, an editor and analyst at FXStreet, notes, "comments on social media indicate that, while some traders see the potential for a healthy correction to $6,500, others predict the market is likely to stay volatile ahead of the expected Segwit2x hard fork."

In the meantime, recent comments from an official at the Reserve Bank of India seems to have played a role on the pair's difficulty to extend its recent rally. “Our current position on bitcoins is that we will not be using it for any payments and settlements…though the technology underlying crypto-currencies will not end,” Ganesh Kumar, executive director of the RBI, told reporters at a conference in Mumbai on Tuesday.

Technical outlook

With a decisive break above $7600 (record high), the pair could aim for the next psychological target of $8000. On the downside, the initial support aligns at $7000 (psychological level) ahead of $6300 (20-DMA) and $5700 (Oct. 29 low).