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Bitcoin is down more than 50% and broke many key supports such as $5,000 against the US Dollar. BTC price seems to be forming a short term bottom near $4,000 and it could recover.
- Bitcoin tumbled below many important supports and tested $4,000 against the US Dollar.
- The price is currently recovering from a major technical level near the $3,900 area.
- There was a break below a key bullish trend line with support at $8,480 on the daily chart of the BTC/USD pair (data feed from Kraken).
- A short term recovery is possible, but there are many hurdles for the bulls near $5,600 and $6,000.
Bitcoin Price Holding Key Technical Support
The past few sessions were absolutely catastrophic, as bitcoin fell significantly from well above the $8,000 level. BTC price is down more than 50% and it broke many supports, including $7,200, $6,500 and $5,000.
The decline was initiated after there was a break below a key bullish trend line with support at $8,480 on the daily chart of the BTC/USD pair. The pair settled well below the $6,500 level and the 100-day simple moving average.
Moreover, bitcoin price broke the last swing low at $6,435 and extended its decline below $5,000. The bears were able to push the price below the 1.236 Fib extension level of the main upward move from the $6,435 low to $10,528 high.
The price spiked below the $4,000 and tested the $3,900 zone. It seems like the 1.618 Fib extension level of the main upward move from the $6,435 low to $10,528 high is acting as a strong support.
What are the Chances of a Recovery?
Bitcoin is showing a few positive signs above $4,500 and it is trading near $5,000. On the upside, an initial resistance is near the $5,600 level.
The first major resistance is near the $6,500 area (the previous breakdown zone). If the price manages to climb back above $6,500, it could start a fresh increase in the coming days.
Conversely, there is a risk of another decline below the $4,500 and $4,000 levels. The next major supports are near the $3,800 and $3,550 levels, below which the bears are likely to aim a test of the $2,400 level. Overall, the recent decline was nasty and it might take a few months for the market to recover if bitcoin stays above the $4,000 mark.
Technical indicators:
Daily MACD – The MACD is showing a lot of bearish signs.
Daily RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 20 level.
Major Support Levels – $4,500 followed by $4,000.
Major Resistance Levels – $5,600, $5,800 and $6,500.
