Bitcoin Price Faces Crucial Test, Indicators Suggest Many Roadblocks To Recovery

Bitcoin price dived toward the $38,500 support zone. BTC is attempting a recovery wave and might struggle to climb above the $40,500 resistance.

• Bitcoin price extended its decline and tested the $38,500 support zone.
• The price is trading below $40,000 and the 100 hourly Simple moving average.
• There is a key bearish trend line forming with resistance near $40,450 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair might struggle to recover above the $40,000 and $40,500 resistance levels.

Bitcoin Price Turns Red

Bitcoin price remained in a bearish zone below the $40,000 support zone. BTC extended its decline and traded below the $49,200 level. Finally, it tested the $38,500 support zone, as discussed in yesterday’s post.

A new weekly low was formed near $38,518 and the price is now correcting losses. It is slowly recovering above the $39,000 level. It cleared the 23.6% Fib retracement level of the downward move from the $42,260 swing high to the $38,518 low.

Bitcoin is now trading below $40,000 and the 100 hourly Simple moving average. Immediate resistance is near the $40,000 level. The first major resistance is near the $40,350 level or the 50% Fib retracement level of the downward move from the $42,260 swing high to the $38,518 low.

Source: BTCUSD on TradingView.com

There is also a key bearish trend line forming with resistance near $40,450 on the hourly chart of the BTC/USD pair. A clear move above the $40,450 resistance could send the price toward the $40,850 resistance. The next resistance is now forming near the $41,250 level. A close above the $41,250 level could push the price further higher. The next major resistance sits at $42,000.

Another Decline In BTC?

If Bitcoin fails to rise above the $40,450 resistance zone, it could start another decline. Immediate support on the downside is near the $39,400 level.

The next major support is $39,000. If there is a close below $39,000, the price could gain bearish momentum. In the stated case, the price could revisit the $38,500 support in the near term.

Technical indicators:

Hourly MACD – The MACD is now losing pace in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now above the 50 level.

Major Support Levels – $39,400, followed by $38,500.

Major Resistance Levels – $40,350, $40,450, and $40,850.

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