Bitcoin attempts a breakout from the falling wedge pattern.
The buyers have no choice but to defend $7,200 support to avoid losses under $7,000.
Bitcoin price action has been drab since the session commenced on Wednesday. The bulls are consolidating the losses, following the retraction from the recent high at $7,654. I expected the bulls to hold the price above $7,500. However, selling activity overwhelmed the battered bulls leading to an extended drop towards $7,200.
It is clear that giving u the support at $7,500 for the second time was a bad idea on the part of the bulls. For now, it is essential that they defend $7,200 support for their dear life. Otherwise, Bitcoin price could disintegrate towards the low in November around $6,530. Moreover, many analysts believe that Bitcoin will dive into the region around $6,000 before any significant recovery takes place.
BTC/USD 1-hour chart
XBT/USD price chart by Tradingview
Meanwhile, the formation of a short term falling wedge pattern suggests that Bitcoin could soon reverse the trend and work to regain the lost ground towards $8,000. The Relative Strength Index doubles down on improving buying power.
Looking at the RSI, I spot a continued upside correction from a low formed at 25.35. In the event the movement to the north continues, BTC could experience a ripple effect as it scales the resistance at $7,400, $7,500 and $7,600. Apart from the short-term support at $7,200, Bitcoin downside is also supported at $7,000, $6,800 and $6,530.
Bitcoin Technical Levels
Spot rate: $7,231
Relative change: 13.22
Percentage change: 0.19%
RSI: Strongly bullish
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