Today, Bitcoin (BTC) price abruptly dropped below the $7,100 support, declining 3.35% to rest near $6,900.

For the past few days, Bitcoin price traded between $7,300 and $7,100, testing the $7,100 and $7,050 support multiple times. Therefore, for many traders, it was no surprise when the price fell below $7,100 as frequent retests of support weaken it.

BTC USD 6-hour chart. Source: TradingView

It’s likely that traders anticipate a bounce at $6,800 and many will watch to see if the $7,100 support flips to a point of resistance. On the 6-hour chart, the relative strength index (RSI) has dropped into oversold territory at 30 and the Stochastic RSI has already begun to cross above 0 so it seems an oversold bounce is already in the making.

If the price is able to reverse course, traders will look for the price to pare today’s losses, possibly extending to the Bollinger Band moving average at 7,200. This $7,200 zone is also aligned with the 61.8% Fibonacci retracement level so, volume permitting, a short-term trend reversal to $7,445 (at the upper Bollinger Band arm) could occur.

Cryptocurrency market daily overview. Source: Coin360

Bitcoin eyes $6.5K and below if the $6.8K support fails

BTC USD daily chart. Source: TradingView

As shown by the volume profile daily range, the price is supported at $6,800. But if this level fails to hold Bitcoin could revisit $6,550, $6,400 and possibly $6,160, which lines up with the lower trendline of the long term descending channel.

Bounces off the descending channel trendline have been a frequent occurrence since the downtrend began on June 23, 2019. As mentioned in previous market updates, below $6,160, $5,800 and $5,350 are the next levels where Bitcoin could appeal to buyers.

At the time of writing the moving average divergence convergence (MACD) is on the verge of a bear cross on the daily time frame and the RSI is dropping towards oversold territory. This makes $6,800 an important level to watch and risk-averse traders will wait for the candle close to determine whether the pullback is over.

Bitcoin 1-day price chart. Source: Coin360

The overall cryptocurrency market cap was $186.7 billion at press time with most altcoins faring worse and Bitcoin’s share inching higher to 68.2% as a result.