TA: Bitcoin Showing Early Signs of Fresh Decline, But $40K Is the Key

Bitcoin started a downside correction and traded below $42,000 against the US Dollar. BTC must stay above $40,000 to avoid a trend reversal.

• Bitcoin started a fresh decline below the $43,000 and $42,000 levels.
• The price is trading below $43,000 and the 100 hourly simple moving average.
• There was a break below a major bullish trend line with support near $42,500 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair might correct further, but the $40,000 support is the key.

Bitcoin Price Breaks Support

Bitcoin price failed to stay above the $43,000 support zone. BTC extended decline and traded below the $42,500 support level.

There was a move below the 23.6% Fib retracement level of the key increase from the $37,030 swing low to $45,350 high. Besides, there was a break below a major bullish trend line with support near $42,500 on the hourly chart of the BTC/USD pair.

Bitcoin is now trading below $43,000 and the 100 hourly simple moving average. It is testing the $41,200 support level. It is also near the 50% Fib retracement level of the key increase from the $37,030 swing low to $45,350 high.

If the price stays above the $41,200 support, it could attempt a fresh increase. On the upside, an initial resistance is near the $42,000 level. The first key resistance is near the $42,500 level and the 100 hourly simple moving average.

Source: BTCUSD on TradingView.com

A clear move above the $42,500 resistance might set the pace for a fresh increase. In the stated case, the price could surpass the $43,000 resistance zone. The next major resistance for the bulls may possibly be near the $44,200 level.

More Losses in BTC?

If bitcoin fails to clear the $42,500 resistance zone, it could continue to move down. An immediate support on the downside is near the $41,200 zone.

The next major support is seen near the $40,200 level. The main support is still near the $40,000 level. If there is a downside break below the $40,000 support, the price might start a major decline.

Technical indicators:

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

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now near the 30 level.

Major Support Levels – $41,200, followed by $40,000.

Major Resistance Levels – $42,000, $42,500 and $43,000.

Source