- Bitcoin's return under $7,000 further complicates the expected recovery towards $8,000.
The potential for recovery will depend on Bitcoin’s ability to push gains above $7,000 in the short term.
For instance, the support I discussed yesterday at $7,000 was eventually overwhelmed by the selling pressure. XBT/USD explored lows beneath the critical $7,000 and tested the vital support at $6,800. It is the immense support from the congestion of buyers at $6,800 that saved the contract from diving further to refresh lows close to the support in November around $6,500.
XBT/USD price chart by Tradingview
A brief recovery is underway, with Bitcoin trading around $6,872. The upside is still limited by the seller congestion at the support tuned resistance zones, $6,900, and $7,000, respectively. Moreover, Bitcoin is trading below the moving averages. The 50 Exponential Moving Average (EMA) on the 4-hour chart is expanding the gap below the longer-term EMA 100. If the picture remains unchanged, Bitcoin could dive further in the direction of $6,500.
Consequently, the confluence formed by the EMA 50 and the 38.2% Fibonacci retracement level further complicates the likely reversal. Besides, correction above $7,000 will still encounter resistance at the EMA100, $7,200 (50% Fibo) and $7,400.
Looking at the RSI, I can tell that Bitcoin is slightly oversold. Due to this, there is a possibility that recovery will follow in the coming sessions.
Bitcoin Key Technical Levels
BitMEX Index Price: $6,861
24-hour volume: $1.8 billion
Open interest: $703 million
Trend: Bearish
Volatility: Low
RSI: Slightly oversold hinting price reversal
Resistance: $7,000 and $7,200
Support $6,800 and $6,500