After an impressive rebound following the retest of the $30K area on Sunday, bitcoin reached $40K earlier today. However, over the past hours, the primary cryptocurrency is losing momentum.
The question is whether this huge $10K recovery will turn into a “dead-cat bounce,” or bitcoin will able to penetrate through the heavy resistance zone of $40-42K?
The good news is that, as of now, bitcoin’s price is still up by a total of 18% from Sunday’s low.
Quick recap: The primary cryptocurrency dipped as low as $31,100 on Sunday but managed to close the daily candle at support around $34,760 (downside 1.414 Fib Extension).
From there, BTC rebounded almost 15% yesterday to reach a high of $39,960 on Bitstamp. This allowed it to break toward the upside of a descending price channel, as mentioned here yesterday, which could act as the first signal that a short-term recovery is on the table.
Additionally, it seems that the bullish “W” formation with the double bottom around the $30-$31K area is continuing to play out (unless the latter price zone will get broken down).
Despite the above, BTC had so far failed to breach the solid resistance at $40-$42K, which provided strong support (now resistance) previously. As you probably know, strong support turns into strong resistance after being broken.
Also in this resistance: the 200-day moving average line, which is now sitting at $40.5K. Over the past hours, we saw two rejections of the $40K resistance.
After the second attempt, bitcoin quickly plunged towards the .786 Fib support around $36,750.
BTC Price Support and Resistance Levels to Watch
Key Support Levels: $36,750 – $36,400, $34,760, $33,520, $32,465, $31,100.
Key Resistance Levels: $40 – $40.5K, $41,350, $42,000, $44,750, $46,815.
Looking ahead, the first resistance lies at $40,000 (200-day MA at $40.5K). This is followed by $41,350 (bearish .382 Fib) and $42,000 (Jan 2021 highs). If the buyers break above the zone, we can expect a quick move to the further resistance zone at $44,750, $46,815 (100-day MA), and $48,310 (bearish .618 Fib).
On the other side, the first support lies at $36,750 (.786 Fib). This is followed by $36,400 (1-hour’s MA-50) $34,760 (downside 1.414 Fib Extension), $33,520, $32,465, and $31,100 (Sunday’s low).
As mentioned here yesterday, the bullish divergence on the daily timeframes RSI has played out nicely, while the RSI created a higher low whereas the price had seen a lower low. The RSI is still in the bearish territory as it sits beneath the midline, but the ascent shows that the bearish momentum is starting to fade quickly.