Bitcoin is down close to 10% and it broke the key $8,000 support against the US Dollar. BTC price is now vulnerable, but the $7,500 support area could spark a decent recovery in the near term.
- Bitcoin is declining heavily below the $8,200 and $8,000 support levels against the US Dollar.
- The price broke many key supports, including the 100-day SMA.
- There was a break below a major bullish trend line with support at $8,670 on the daily chart of the BTC/USD pair (data feed from Kraken).
- The next major support on the downside is near the $7,500 area, where the bulls are likely to appear.
Bitcoin Price Dives 10%
In yesterday’s weekly forecast, we discussed a breakdown pattern in bitcoin and the chances of it hitting the $8,400 level. BTC price not only tested the $8,400 level, but it dived sharply below the $8,200 support.
The daily chart suggests that the price broke many important supports, starting with $9,000 and $8,800. The first major support was near the $8,750 level and a major bullish trend line.
The next key support was near the 50% Fib retracement level of the main upward move from the $6,442 low to $10,560 high. More importantly, bitcoin price traded below the $8,200 support area (the previous breakout zone) and the 100-day simple moving average.
The price is now trading well below the 61.8% Fib retracement level of the main upward move from the $6,442 low to $10,560 high. These are strong bearish signs, suggesting chances of more losses below the $7,800 level.
An immediate support is near the $7,500 level (a multi-touch zone), where the bulls are likely to take a stand. If they fail to defend $7,500 and $7,400, the next stop could be $6,500 in the coming days.
What are the Chances of a Recovery?
The current price action suggests bitcoin is under a lot of selling pressure below $8,200 and $8,000. However, the $7,500 support area could be a savior.
If the price finds a strong buying interest near the $7,500 area, it could start a decent recovery. On the upside, an initial resistance is near the $8,280 level. The main resistance area is near $8,400 and the 100-day SMA, above which the bulls are likely to aim a test of the $9,000 level.
Technical indicators:
Daily MACD – The MACD is showing a few contra bullish signs.
Daily RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 40 level.
Major Support Levels – $7,500 followed by $7,400.
Major Resistance Levels – $8,200, $8,400 and $8,500.