Bitcoin Showing Signs of Weakness But 100 SMA Can Trigger New Rally
This past week, bitcoin traded higher above the $6,400 and $6,500 resistance levels against the US Dollar. BTC price even spiked above the $7,000 resistance and settled nicely above the 100 simple moving average (4-hours).
It traded as high as $7,273 before starting a downside correction. The price settled below the $7,000 level to start the correction. Besides, there was a spike below the 50% Fib retracement level of the upward move from the $6,150 low to $7,273 high.
The price tested the $6,600 support area and it is currently consolidating in a range. It seems like the 61.8% Fib retracement level of the upward move from the $6,150 low to $7,273 high is acting as a support.
There is also a key bullish trend line forming with support at $6,425 on the 4-hours chart of the BTC/USD pair. More importantly, the 100 simple moving average (4-hours) is near the trend line and the $6,400 support.
If BTC fails to stay above the $6,400 support and the 100 SMA, there is a risk of a significant decline. The next key support is near the $6,000 level, below which it could even test the $5,800 support area.
Bitcoin bulls need to protect the $6,400 support and the 100 SMA for another increase in the near term. On the upside, an initial hurdle is near the $7,000 level.
A successful break above the $7,000 resistance level could spark a strong rally above the $7,200 and $7,270 levels. The next major resistance is near the $7,500 level, above which the price is likely to test the $7,880 level.