In the previous week, bitcoin saw a strong decline below the $4,200 support level and settled well below the 100 simple moving average (4-hours). A new multi-month low was formed around the $3,906 level and the price is currently making an upside correction.

The price recovered losses and climbed above the $4,500 and $5,000 resistance levels. Moreover, there was a break above the 23.6% Fib retracement level of the recent spike from the $7,974 high to $3,906 low. The price later managed to settle above the $5,500 resistance level.

However, a strong resistance was seen at the $6,000 area. Additionally, the 50% Fib retracement level of the recent drop from the $7,974 high to $3,906 low is also acting as a key resistance. There is a crucial contracting triangle currently forming, with resistance near $5,350, on the BTC/USD 4-hours chart. If the price successfully breaks the triangle resistance, it could revisit the $6,000 resistance area.

The main resistance is seen close to the $6,450 and $6,500 levels. There is also a formation of a connecting bearish trend line, with resistance near $6,450, on the same chart. The price must surpass the $6,000 resistance and then gain pace above the $6,500 barrier, before beginning any decent uptrend.

If the price fails to climb above the $5,500 or $6,000 levels, there is a risk of another bearish break. A successful break below the $5,000 and $4,850 levels is likely to open the doors for more losses. An initial support is seen around the $4,200 level, below which the price might drop further to $4,000. Any further losses could pave way for a move towards the $3,600 level.

Technical Indicators

The 4 hours MACD for BTC/USD is about to move back into the bearish zone. The RSI (Relative Strength Index) for the pair on the same chart is currently just above the 30 level. Major support level is seen at $4,850, whereas major resistance level is at $6,000.

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