After a pullback, the price of Bitcoin has continued its downward movement. The coin, after failing to break above the 100-day Simple Moving Average (SMA) and the trendline, has experienced a decline of more than 6% from its previous high.
Will the price of BTC continue to move in a downward direction or will it reverse and start moving in an upward direction?
At the time of writing, BTC’s price was trading around $62,972, which is about 28% lower than its all-time high and down 1.27% over the past 24 hours. Although the price is trading below the 100 SMA on the 4-hour chart, it is still trading above the 100 SMA on the daily chart.
Current state of indicators and what they suggest
Looking at the chart, a support level and resistance level were technically formed at $59,653 and $67,255 respectively. However, there could be more support resistance levels occurs if the price continues to fall.
4-hour moving average: A technical observation of the chart from the 4-hour time frame, as seen in the image below, shows that the price is below the 100-day moving average. This suggests that the price is in a downtrend and could potentially move further down.
4-Hour RSI Indicator: The Relative Strength Index (RSI) indicator here indicates a downtrend as the RSI signal has crossed the 50% line and is below the 50% line as observed in the chart above .
The MACD indicator from the 4-hour chart also suggests that the price could continue to decline as the MACD histograms dip below the zero line. Both the MACD line and the signal line have crossed the MACD zero line and are below the MACD zero line, indicating a bearish trend, as seen in the image above.
Possible outcome
With the setup of the above indicators, it can be suggested that the price of Bitcoin is still bearish and there are possibilities that it could move even further down.
If Bitcoin continues its decline and moves below the support level at $59,653, it could witness a deep correction to create a new support level. However, if the price fails to settle below this support level, it could start an upward correction move towards the previous level of $67,255. If it manages to break above this level, the price will start an uptrend.
Featured image from iStock, chart from Tradingview.com
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