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Bitcoin traded to a new 2020 high at $9,575 and recently corrected lower against the US Dollar. It seems like a head and shoulder pattern is forming, which could drag BTC towards $8,800.
- After a steady rise, bitcoin price struggled to gain momentum above $9,500 against the US Dollar.
- The price is currently declining and it could slide below the $9,150 support.
- There was a break below a major bullish trend line with support near $9,400 on the 4-hours chart of the BTC/USD pair (data feed from Kraken).
- A crucial head and shoulders pattern is likely forming with support near $9,150.
Bitcoin Is at Risk of a Sharp Decline
This past week, bitcoin extended its upward move above the $9,200 and $9,400 levels against the US Dollar. BTC price even spiked above the $9,500 resistance area and settled above the 100 simple moving average (4-hours).
However, the bulls struggled to remain in action above the $9,500 resistance area. A high was formed near $9,575 and the price started a downside correction. It traded below the $9,440 and $9,400 support levels.
More importantly, there was a break below a major bullish trend line with support near $9,400 on the 4-hours chart of the BTC/USD pair. Besides, bitcoin traded below the 23.6% Fib retracement level of the larger upward move from the $8,214 low to $9,575 high.
The price is now trading near the key $9,150 support. Furthermore, it seems like a crucial head and shoulders pattern is forming with support near $9,150 on the same chart.
If there is a downside break below the $9,150 support, bitcoin bears are likely to take control. In the mentioned case, the first target for the bears could be $8,895. It coincides with the 50% Fib retracement level of the larger upward move from the $8,214 low to $9,575 high.
The main supports below $9,000 are near the $8,880 and $8,800 levels. Moreover, the 100 simple moving average (4-hours) is also near the $8,800 area. Therefore, the bulls are most likely to protect the key $8,800 support level in the near term.
What if BTC Holds $9,150
It is quite clear that $9,150 is a breakdown support area. If bitcoin bulls are able to protect the $9,150 support, the price might restart its upward move.
On the upside, an immediate resistance is $9,400. The main hurdle is near the $9,500 and $9,580 levels, above which the price is likely to surge towards the $10,000 barrier.
Technical indicators
4 hours MACD – The MACD for BTC/USD is slowly gaining pace in the bearish zone.
4 hours RSI (Relative Strength Index) – The RSI for BTC/USD is just below the 50 level.
Major Support Level – $9,150
Major Resistance Level – $9,500
