For about two weeks, Bitcoin has struggled near support around $42,000. This is a really relevant level, so it was expected that the support would be resistant to selling pressure. After all, the price of bitcoin has been holding at the said band most of the time since the beginning of December. Yesterday, however, the situation quite possibly changed, as the price of Bitcoin gradually broke below 40,000 dollars. This means that the level can be considered definitively broken.
Therefore, this increased the probability that a further 15 to 23% drop is possible. Which are the price levels located at $34,000 and $30,000. As I mentioned earlier, such slumps are historically quite common.
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Bitcoin price has fallen below key support
As I mentioned in the introduction, the price of Bitcoin has been hovering around $42,000 for many weeks. However, I had many breakouts below the $41,000 level, which I assumed was a repeated withdrawal of liquidity that was below that band.
The breakthrough occurred late yesterday evening, accompanied by increased selling pressure. As a result, the daily candle closed in a rather unfriendly way and the volumes are large. Respectively, they are proportional to the size of the given bearish candle. We can judge this as a clear victory for the sellers .
As you can see, the price of Bitcoin is very close to the support band around $38,000. We will probably test the mentioned level and even should. After the breakthrough in early December, we did not confirm the level as support at all.
According to the daily RSI, we are now at 37 points. The indicator has not fallen this deep since September 2023. Therefore, I consider the low levels of the indicator to be a signal that the Bitcoin market is preparing for a more complex correction.
The weekly chart looks even worse, as the candlestick formation in the form of a shooting star has been confirmed . I assumed that the price of bitcoin would gradually respond to this by falling. Honestly, who would take a long position when there is a candle like this?
In conclusion: Price levels act as a magnet for Bitcoin
One technical knowledge of the market is confirmed for us and that is that untested price levels work like a magnet for the market . When we assume that the market is trying to be efficient, it is better to expect the price to return to those levels and test them.
My outlook is for Bitcoin to test the $30,000 support and below in the coming months. If the price falls to these levels, it is still within the bounds of a correction.
