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Where Will Bitcoin Find Support?

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Written by
Valdrin Tahiri

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Edited by
Kyle Baird

25 May 2020 11:05 UTC
Trusted

During the week of May 17-24, the Bitcoin price decreased considerably. It created a bearish engulfing candlestick that caused it to decrease all the way to an important support level.

A breakdown below this support could indicate that the price has begun a new bearish trend.

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Bearish Bitcoin Weekly Close

The bearish weekly close has caused the price to be rejected below the long-term descending resistance line that has been in place since the December 2017 all-time high.

However, the weekly close was at the same level as that during the week of May 3-10, reducing some of the bearishness by the candlestick.

It seems that the previous breakout was not valid, and the price is likely to decrease in the near future.

In the weekly time-frame. the closest support area is found at $6,550, while the closest resistance at $12,000.

Bitcoin Weekly Close
Bitcoin Chart By Trading View

Ascending Support Line

Moving to a lower time-frame, the daily chart reveals that the price is fast approaching a confluence of support levels near the $8,500 area:

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  • The long-term ascending support line that the price has been following since March 13.
  • The $8,500 support level.
  • The 50-day moving average (MA), which has just made a bullish cross with the 200-day MA.

Therefore, the price is expected to bounce once it reaches this level. In addition, yesterday’s decrease has caused the price to break down from another possible ascending support line, which was drawn from the same low but had been much steeper.

Bitcoin Ascending Support Line
Bitcoin Chart By Tradingview

Support Level

In the even shorter-term, we can see that BTC has just fallen below the 0.618 Fibonacci level of the entire upward move beginning on May 11. The $8,5550 level is an area that previously initiated upward moves, and also the 0.765 Fib level. Therefore, it is very likely that it initiates a bounce.

However, there is no bullish divergence in the RSI just yet, so it is possible that the downward move might continue towards $8,000. A breakout above the descending resistance line (dashed) would indicate that the downward move is likely over.

Bitcoin Retracement
Bitcoin Chart By Tradingview

To conclude, the Bitcoin price has decreased all the way to an important support level at $8,550. A breakdown below it and its subsequent validation as resistance would be a major bearish development that would indicate that the upward move beginning on March 13 has ended.

For those interested in BeInCrypto’s previous Bitcoin analysis, click here.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.