The price of Bitcoin dropped below $17,600 on Dec. 11, which is the lowest since November, as the asset continued its price correction mode. The recent correction has dashed the hopes of many in the market of the asset reaching $20,000 in 2020. However, the tide can be turned if Bitcoin reclaims a key technical price level soon.
Dec. 01, saw Bitcoin reach a new all-time high of $19,892 after nearly three years. However, after the rally towards the coveted $20,000, the price lowered by more than 10% leading to the correction period the asset is currently experiencing.
The market has been hit by several events and news, one of them being the proposed crypto regulation in the United States, which has brought fear to the otherwise euphoric market. The good news is that Bitcoin is not the only asset, and crypto not the only market that has been affected, as other markets have also suffered this week with equities also cooling off.
TradingView 4-hour chart implies a clear downtrend on Bitcoin price. This kind of a downtrend is confirmed by lower highs and lower lows.
Bitcoin’s price failed to break through the all-time high region, then $18,500-18,700 acted as a strong support area for a week. Each bounce from this price region marked a weaker bounce, as lower highs were realized. The support however failed after three tests, leading to the fall of Bitcoin’s price to the next support level which was between $17,600-17,800.
The support level initiated a small bounce in price to $18,500-18,700. However, the price failed to flip for support, which would enable it become bullish. The fail confirmed a bearish support/resistance flip, which further supported the ensued downtrend.
The downtrend will see more lower highs and lower lows until a clear bottom is found. However, this does not seem to be possible for the market currently, as higher timeframes are also eager to turn south.
TradingView’s daily chart shows there is a potential bearish divergence ready to play out which will be confirmed when the price of Bitcoin fails to break through $18,600-18,800. If this happens, a previous resistance becomes resistance again, showing the market’s overall weakness and the likelihood of a more downward trend.
Based on this daily chart, the support zone is at $16,000, which is the first massive support zone on the daily timeframe.
To attain bullish trend in the short term, Bitcoin price will have to reclaim the $18,600-18,800 area for support. This level would ultimately invalidate the bearish divergence and any bearish outlook in the time being.
Image courtesy of pixabay
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