- Bitcoin has failed to crack $34,000, suggesting that further downside is to come
- There are a variety of support levels down to $26.5, which would represent a 37% correction
- Only a close under $20,000 would suggest an end to the bull run
Bitcoin has failed an attempt to break through $34,000, resulting in a clear reinforcement of a downtrend and bringing with it the possibility of further downside closer. With Bitcoin continuing to look weak in the short term, what are the targets we need to be looking at to find some strength?
Support Clusters Could Provide Relief
Bitcoin reacted strongly from its latest drop to $29,250 support, but the ultimate test was always going to be how it dealt with the downward trendline that has been in place for over a week. A clear rejection of this downtrend followed, which will surprise no one who has been watching its price action since topping out at $42,000:
Assuming that Bitcoin continues its downtrend, which looks all but inevitable, there is a cluster of support at around $31,200 and another one at $29,880:
If Bitcoin can turn one of these support areas into a base for a higher high and a higher low then we could be in line for a reversal, but they are not particularly strong and it seems much more probable that a fall to lower levels is imminent. If this were to happen, Bitcoin has support at a number of key areas on the way down, from $31,830 to $26,500:
Were Bitcoin to close around any of these levels it would leave us with a hideous monthly candle, the meaning of which we have already discussed this week:
While a full on 80% correction from the high is probably out of the question given the current desire for Bitcoin, a fall below $26,500 is not out of the question, with only a close below $20,000 suggesting an end to the bull market.
