Bitcoin's Decline Sparks Concern: Key Support and Resistance Levels to Watch

Bitcoin, a leading cryptocurrency in the global market, experienced a significant decrease in its market value earlier this week. The cryptocurrency’s value touched its lowest in seven weeks, reversing the gains it had achieved towards the end of last week. This slump in Bitcoin’s market value can be attributed to Fed Chair Powell hinting at a possible cut in interest rates.

Bitcoin’s Unanticipated Dip

Bitcoin (BTCUSD) has been under considerable pressure recently, with prominent investors reportedly liquidating their positions. The selloff has considerably increased bitcoin ETF outflows. The cryptocurrency’s value has fallen by 12% since soaring above $124,000 on August 14th, marking a record high for the digital currency. Bitcoin reached a low of $108,700 early this week, the lowest since July 9 this year.

The Theory of a Potential Bull Trap

Since hitting its record high less than two weeks ago, Bitcoin has changed course. Instead of continuing its upward trajectory, the cryptocurrency’s value has significantly dropped, setting the stage for a possible bull trap. A bull trap is a phenomenon in trading where the prices rise before taking a deep plunge. This sudden switch often leaves investors facing unexpected losses. As Bitcoin hit a new high, the relative strength index (RSI) correspondingly made a less acclaiming high. This creates a divergence between the price and indicator, signaling decreased buying interest. The RSI is a tool widely used by technical analysts and traders. The world’s leading cryptocurrency’s bearish trend has urged investors to monitor two significant support levels and resistance areas keenly.

Support Levels

The first significant support level for Bitcoin sits around $107,000. Here, investors may view this as an opportunity to accumulate BTC near the prominent December and January peaks, which could potentially convert from prior resistance to future support. However, should selling surpass this level, it could trigger a decline towards the $100,000 mark, which is currently in close proximity to the upward looming 200-day moving average. This support level is likely to attract buying interest near a horizontal line that corresponds with a range of trading activity on the chart between November and June.

Resistance Levels

During its path to recovery, investors should monitor the $117,000 mark. The cryptocurrency may encounter selling pressure near this zone. This zone coincides with Bitcoin’s unsuccessful attempt last week to retest the 50-day MA and a sideways trend that formed on the chart during the second half of July. Lastly, a bullish reversal could spur a rally toward $123,000. Investors who capitalized on Bitcoin’s recent pullback could seek to exit near this month’s closing high, which also closely aligns with the previous month’s high.

Disclaimer

The information provided in this article is solely for informational purposes. It is essential to conduct thorough research and consider multiple sources of information before making any investment in the cryptocurrency market. In conclusion, Bitcoin’s current market trend marks an essential phase for the cryptocurrency. Both investors and traders must keep track of significant support and resistance levels to maintain their profitability in this volatile market. Despite the market’s unpredictability, prudent measures, thorough analysis, and diligence are keys to making the most out of the world of cryptocurrency.

Bitcoin’s Decline Sparks Concern: Key Support and Resistance Levels to Watch