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Bitcoin declined more than $1,500 in the past few days against the US Dollar. BTC is now facing a drop to $8,200 or $8,000 before a strong upward move in the coming days.
- After forming a short term top, bitcoin price dived below $9,000 and $8,800.
- The price is currently consolidating above $8,500, with a few bearish signals.
- There is a key declining channel forming with resistance near $8,660 on the 4-hours chart of the BTC/USD pair (data feed from Kraken).
- The pair could correct in the short term, but it remains vulnerable to a drop towards $8,000.
Bitcoin Could Dive Towards $8,000
This past week, bitcoin extended its decline below the $9,200 and $9,000 support levels against the US Dollar. BTC price even settled below $9,000 and the 100 simple moving average (4-hours).
It traded to a new weekly low at $8,441 and recently started consolidating losses. There was a minor upside correction above the $8,550 and $8,700 levels. Besides, there was a break above the 23.6% Fib retracement level of the key decline from the $10,020 high to $8,441 low.
However, the recent correction failed near the $8,950 and $9,000 levels. It seems like bitcoin bulls are struggling to gain momentum above the $8,800 level. There is also a key declining channel forming with resistance near $8,660 on the 4-hours chart of the BTC/USD pair.
On the downside, the $8,500 and $8,450 levels are initial supports. If the bulls fail to defend the recent low of $8,441, there is a risk of a sharp decline.
The next key supports on the downside are near the $8,200 and $8,000 levels, where the bulls are likely to take a strong stand (as discussed in one of the recent analyses using the daily chart).
Upside Correction
If there is a clear break above the channel resistance, bitcoin price could test the $8,820 resistance level. If the bulls manage to gain strength above $8,820, there are chances of a decent recovery towards the $9,200 resistance area.
The key breakout zone is near the $9,200 and $9,300 levels. The 50% Fib retracement level of the key decline from the $10,020 high to $8,441 low is also near the $9,230 level to act as a hurdle.
Therefore, upsides are likely to remain capped unless there is a solid rally above the $9,200 and $9,300 levels.
Technical indicators
4 hours MACD – The MACD for BTC/USD is about to move back in the bearish zone.
4 hours RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 40 level.
Major Support Level – $8,500
Major Resistance Level – $9,200
