Last night, the price of Bitcoin (BTC) hit a low of $8,900 after a vigorous rejection of the $9,800 level. According to some traders, the breakdown of BTC under the $9,200 support could cause a new downtrend to begin.
In the short term, traders expect a correction. Almost every single indicator, macro trendline and momentum oscillator suggests an imminent price drop.
When Bitcoin slipped below $9,200, it also fell below an important Bollinger Band, which often represents a key level for cryptocurrency.
The value of Bitcoin then continued to fall, quickly reaching a low of $8,900. The price therefore risks slipping to the lower limit of the Bollinger Band, in the area around $8,500.
According to Jonny Moe, a well-known Bitcoin trader, the price could fall to a trendline dating back to before March 12.
In fact, in March, Bitcoin’s price hit a low of $3,600, before recovering to above $10,000. However, the cryptocurrency has not been able to confirm support between $9,800 and $9,900, and therefore remains vulnerable to a deep pullback below the rising channel.
BTC USD pair chart
According to Moe, if
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price gets a closing below $9,000, the next cryptocurrency support is between $6,500 and $7,300.
TraderXO, who already last week predicted a contraction to $7,700, said that at this moment BTC shows a typical „lower high“ configuration, and risks a rapid correction below $8,000.
Why is the trader’s opinion bearish?
There are two reasons why many traders are bearish at Bitcoin right now: lack of support between $7,700 and $9,000, and strong resistance at $10,500.
The price of BTC has soared, almost unimpeded, from $7,700 to $10,000. At the time this movement was interpreted as a demonstration of the strength of cryptocurrency, but it has become vulnerable to significant correction.
Moreover, although there is almost no resistance between $10,500 and key levels such as $12,500 and $14,000, Bitcoin has repeatedly proven itself unable to overcome the strong resistance between $10,000 and $10,500.
Already in April, Mark Dow, economist and investment fund manager, commented on Twitter that the Bitcoin chart shows a clear short opportunity:
„On the Bitcoin chart, there is enormous resistance at the top. Based on this chart, there is a classic short opportunity right now.“
Summing up, the strong resistance between $10,000 and $10,500, combined with the lack of support between $7,700 and $9,000, increases the probability of the Bitcoin price collapse in the $7,000 area.