- Bitcoin’s return under $7,000 further complicates the expected recovery towards $8,000.
- The potential for recovery will depend on Bitcoin’s ability to push gains above $7,000 in the short term.
Bitcoin perpetual swap contract on BitMEX cryptocurrency exchange has no way of stopping the selling activity that befell it since the highs posted in June. Recovery has continued to be thwarted by the bearish wave, seeking to see Bitcoin close the year at extreme lower levels.
For instance, the support I discussed yesterday at $7,000 was eventually overwhelmed by the selling pressure. XBT/USD explored lows beneath the critical $7,000 and tested the vital support at $6,800. It is the immense support from the congestion of buyers at $6,800 that saved the contract from diving further to refresh lows close to the support in November around $6,500.
XBT/USD 1-hour chart
A brief recovery is underway, with Bitcoin trading around $6,872. The upside is still limited by the seller congestion at the support tuned resistance zones, $6,900, and $7,000, respectively. Moreover, Bitcoin is trading below the moving averages. The 50 Exponential Moving Average (EMA) on the 4-hour chart is expanding the gap below the longer-term EMA 100. If the picture remains unchanged, Bitcoin could dive further in the direction of $6,500.
Consequently, the confluence formed by the EMA 50 and the 38.2% Fibonacci retracement level further complicates the likely reversal. Besides, correction above $7,000 will still encounter resistance at the EMA100, $7,200 (50% Fibo) and $7,400.
Looking at the RSI, I can tell that Bitcoin is slightly oversold. Due to this, there is a possibility that recovery will follow in the coming sessions.
Bitcoin Key Technical Levels
BitMEX Index Price: $6,861
24-hour volume: $1.8 billion
Open interest: $703 million
RSI: Slightly oversold hinting price reversal
Resistance: $7,000 and $7,200
Support $6,800 and $6,500