Bitcoin (BTC) has broken down from the $46,300 horizontal support area but is still trading near the long-term support of $44,300.
In the early hours of Jan 6, BTC decreased considerably, falling all the way to a low of $42,500. The decrease caused a breakdown from the $46,300 horizontal support area, which had previously been in place for 32 days.
A breakdown from such a long-term support area is a very bearish development.
The price is now approaching the Dec 4 lows of $42,000.
A closer look at the trend shows that while volume was significant (red icons), it was considerably lower than that during the Dec 4 decrease.
In addition to this, BTC seems to be following a descending support line. So far, it has validated the line four times (green icon), most recently on Jan 6.
As long as it is trading above this line, the possibility of a bounce and a reversal remains high.
If this occurs, the $46,300 area would now be expected to act as resistance.
Long-term BTC movement
The daily chart shows that BTC is trading slightly below the $44,300 support area, which is created by the 0.618 Fib retracement support level.
In order for the long-term upward trend to continue, it’s imperative that BTC does not reach a close below this level.
In addition to this, the bullishness from technical indicators has not been invalidated yet. There are bullish divergences present in both the MACD and RSI.
Therefore, until both indicators make a lower low and invalidate this divergence, the possibility of a reversal remains high.
A continued decrease in the BTC price would likely cause both indicators to invalidate their divergences and cause a breakdown from the $44,300 long-term support.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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