Bitcoin Reaches Critical Support Area. Bounce or Break?

Price Predictions
Fri, 01/11/2019 - 19:49
Thomas Hughes
The recent Bitcoin drop nullified all gains made during the last couple of weeks and demolished any short term hopes of a steady climb above $4,000
Cover image via U.Today

The recent Bitcoin drop nullified all gains made during the last couple of weeks and demolished any short term hopes of a steady climb above $4,000. The market cap shed $16 billion in a single day, currently standing at $122 billion and BTC/USD is currently testing a critical support level located at 3700.

Chart Analysis – BTC/USD

Last time BTC/USD touched the current level (3700), it recovered swiftly and managed to climb above the 200-period Exponential Moving Average on a 4-hour chart. Price also showed a strong reaction to the level in the past, so it’s safe to say that the way it will behave now will determine the next short to medium term direction.

A bounce higher will take the pair above 3820 and possibly into the bearish trend line seen on the chart above. A move above the 200-period EMA will solidify the climb and will probably bring in additional buyers.

On the other hand, a break of 3700 will make 3500 the first target (BRN – big round number) and will open the door for a drop into 3200 area in the longer term. Even if this second target is reached, we will probably see upswings until the price gets there.

Support zone: 3700 (still intact at the time of writing), 3500

Resistance zone: 3820, 200 period EMA and the bearish trend line

Most likely scenario: unclear, depending on how the “bounce or break” scenario plays out

Alternate scenario: low volatility price action, no clear break or bounce

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About the author

Thomas Hughes is an executive editor of U.Today. He is a skilled cryptocurrency trader and technical analyst deeply immersed into the cryptocurrency & blockchain technology area.

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