Bitcoin Shows Signs of Reversal; But $6550 Shows Bullish Case Remains Intact

Bitcoin failed to surpass the $7,200 resistance and declined below $7,000 against the US Dollar. BTC price is showing a few bearish signs, but the bulls are likely to protect $6,555. Bitcoin is declining and trading below the $7,000 support zone against the US Dollar. It is testing a major support near the $6,750-$6,800 region. There was a break below a key bullish trend line with support near $7,110 on the hourly chart of the BTC/USD pair (data feed from Kraken). The pair is likely to find a strong buying interest if it corrects further towards the $6,555 support. Bitcoin Correcting Gains After a couple of failed attempts above $7,200, bitcoin price reacted to the downside against the US Dollar. BTC started a downside correction from the $7,229 swing high and traded below the $7,100 support. The price declined sharply below the $7,000 support and the 100 hourly simple moving average. More importantly, there was a break below a key bullish trend line with support near $7,110 on the hourly chart of the BTC/USD pair. Bitcoin price The pair even spiked below the $6,800 support and tested $6,750. A low is formed near $6,761 and the price is correcting consolidating losses. Bitcoin price is testing the 23.6% Fib retracement level of the recent drop from the $7,226 high to $6,761 low. An initial resistance on the upside is near the $7,000 handle (the recent breakdown zone). The 50% Fib retracement level of the recent drop from the $7,226 high to $6,761 low is also near the $7,000 zone to act as a major hurdle for the bulls. The main resistance is now forming near the $7,100 level and the 100 hourly simple moving average. Any further gains could open the doors for a strong increase above the $7,200 resistance area. Bulls in Action? On the downside, an immediate support is near the $6,750-$6,800 zone. If bitcoin slides below the $6,750 support, there is a risk of an extended decline in the near term. The key support is seen near the $6,555 level, where the bulls are likely to take a stand. Any further losses may perhaps start a substantial decline towards the $6,200 and $6,000 levels in the near term. Technical indicators: Hourly MACD – The MACD is gaining momentum in the bearish zone. Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 40 level. Major Support Levels – $6,750 followed by $6,555. Major Resistance Levels – $7,000, $7,100 and $7,200. Image from unsplash

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