Bitcoin Vulnerable To A Nasty Drop Unless It Claims $7K
In the past few sessions, bitcoin remained well bid above the $6,400 support area against the US Dollar. BTC price even climbed above the $6,800 resistance and settled above the 100 hourly simple moving average.
However, the bulls seem to be struggling near the $7,000 resistance area. There is likely a double top pattern forming with resistance near $7,000. The last swing high was formed near $6,989 before the price corrected lower.
There was a break below the 23.6% Fib retracement level of the main rise from the $5,750 swing low to $6,989 high. On the downside, the $6,500 area is acting as a strong support.
The main neckline support for bitcoin is near the $6,400 level and the 100 hourly simple moving average. It is also close to the 50% Fib retracement level of the main rise from the $5,750 swing low to $6,989 high.
If there is a downside break below the $6,400 support and the 100 hourly SMA, it could start a major decline. The next support is near the $6,200 area. Besides, there is a crucial bullish trend line forming with support near $6,240 on the hourly chart of the BTC/USD pair.
A clear break below the trend line support will most likely confirm the highlighted double top pattern. In the stated case, the price is likely to dive towards the $6,000 and $5,800 support levels.
If bitcoin remains well bid above the $6,500 and $6,400 support levels, it could rise above the $7,000 resistance area in the coming sessions.
A successful break and follow through above $7,000 may perhaps negate the double top pattern and the price could surge towards the $7,500 level.