Bitcoin price recently experienced a significant decline after failing to test the $50,000 resistance zone. The digital currency reached its peak near the $49,000 level and began a downward trend. This decline resulted in a break of several crucial support levels, including $45,000, pushing Bitcoin into a short-term bearish zone.
The Current Situation
Currently, Bitcoin is trading below $43,500 and the 100 hourly Simple Moving Average. The hourly chart of the BTC/USD pair shows the formation of a bearish trend line with resistance around $42,850. This indicates that the pair may experience a further decline if it falls below the $41,500 support zone.
Prior to the decline, Bitcoin saw a strong decrease below the $48,000 and $46,500 support levels. The bears exerted enough pressure to push the price below the important $45,000 support zone. As a result, the price plummeted by over 12% and tested the $41,500 support zone. A low was eventually established near $41,476, leading to a small recovery wave.
Resistance and Important Levels to Watch
Although there was a minor increase above the $42,000 resistance zone, Bitcoin is still trading below $43,500 and the 100 hourly Simple Moving Average. The immediate resistance is anticipated around the $42,800 level. Additionally, a bearish trend line is forming with resistance near $42,850 on the hourly chart of the BTC/USD pair.
The first major resistance level lies at $43,250 or the 23.6% Fibonacci retracement level of the downward move from the $49,000 swing high to the $41,476 low. A clear move above this resistance could potentially send the price toward the next resistance at $44,000. Another resistance is forming near the $45,200 level, which coincides with the 50% Fibonacci retracement level mentioned earlier. The next significant resistance is located at $47,000.
The Potential for Further Decline
If Bitcoin fails to surpass the $43,250 resistance zone, there is a risk of a fresh decline in its price. A speculative situation could then occur, with immediate support on the downside expected near the $42,120 level. The next major support is anticipated to be at $41,500. In the event that Bitcoin falls below this level, it could trigger a bearish momentum, potentially leading to a drop toward the $40,000 support level in the near future.
Considering the technical indicators, the MACD on the hourly chart of Bitcoin is currently showing diminishing momentum in the bearish zone. Furthermore, the Relative Strength Index (RSI) for BTC/USD is now below the 50 level.
Bitcoin faces a critical situation as its price undergoes a major decline, breaking key support levels and entering a short-term bearish zone. While there is a possibility of a recovery, the resistance levels and technical indicators indicate potential ongoing decline. It is important for investors to conduct thorough research and analysis before making any investment decisions, as cryptocurrency investments inherently carry risks.
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