- Bitcoin extends the bearish leg, testing $6,600 amid growing pre-Christmas volatility.
- The formation of a double-bottom pattern is likely to boost BTC/USD above $7,000.
Bitcoin is suffering losses close to 3% on Tuesday. The declines follow the destruction of the support at $7,000 during the American trading session on Monday. Initially, $6,800 stood in support, preventing further downside correction. Recovery attempts made earlier in the day failed in making headway above $6,900, leaving $7,000 resistance untested.
The pre-Christmas volatility coupled with negative technical picture extended the bearish leg testing $6,600. The intraday low formed at $6,634 is the stepping stone for ongoing recovery. BTC/USD is teetering at $6,700, besides the developing bullish momentum signals a reversal that could soon reclaim the support at $6,800 and trend towards $7,000.
BTC/USD 1-hour chart
Looking at the 4-hour chart from a broader perspective, I can spot a possible double-bottom pattern. The pattern is used to signal a reversal in classical technical analysis. In this case, the impact of this pattern could eventually blast Bitcoin in a much-anticipated trajectory towards $7,000. Further up, the recovery is targeting $7,600 before Christmas and $8,000 towards the New Year.
Meanwhile, the technical picture is still mainly in the hands of the bulls. For instance, the gap between EMA 50 and EMA 100 continues to widen, emphasizing the firm grip by the bears. Besides, the RSI is still oversold at 22.96. Traders can also be on the look for a reversal by the RSI above 30, which could signal recovery movement towards $7,000.
Bitcoin Key Levels
RSI: Oversold – possible reversal signal in the near-term
Support $6,600 and $6,500
Resistance: $6,800, $7,000 and $7,200.