Bitcoin Could Correct Further To 100 SMA at $8,200 Before Fresh Increase

Bitcoin rallied to $9,500 before starting a downside correction against the US Dollar. BTC price might dip towards the $8,200 support zone before a fresh increase.

• Bitcoin jumped more than 20% and tested the main target of $9,500 (as discussed yesterday).
• The price is down more than 8% and it is now trading well below the $9,000 level.
• There is a short term declining channel forming with resistance near $8,800 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair could correct further towards $8,400 or $8,200 before a fresh increase.

Bitcoin Correcting Gains

Yesterday, we saw a strong pre-halving rally in bitcoin above the $8,000 and $8,500 resistance levels against the US Dollar. BTC price gained more than 20% and it even tested the main target of $9,500 (as discussed yesterday’s analysis using the daily chart).

A new monthly high is formed near $9,498 and the price recently started a substantial downside correction. There was a break below the $9,200 and $9,000 support levels. Bitcoin even dived below the $8,800 level and tested the $8,400 support area. A low is formed near $8,405 and the price is currently trading above the 23.6% Fib retracement level of the recent decline from the $9,498 high to $8,405 low. On the upside, an initial resistance is near the $8,800 level. There is also a short term declining channel forming with resistance near $8,800 on the hourly of the BTC/USD pair.

Above the channel resistance, the next resistance is near the $8,950. It is close to the 50% Fib retracement level of the recent decline from the $9,498 high to $8,405 low. To start a fresh increase, the bulls need to push the price above the channel resistance and then clear the $8,950 resistance. A successful follow through above the $9,000 level could pump the price towards the $9,200 and $9,500 levels in the near term.

Downside Thrust

On the downside, the first major support for bitcoin buyers is near the $8,400 level. The next major support is near the $8,200 level or the 100 hourly simple moving average. It seems like the price might dive towards the $8,400 support or the 100 hourly SMA to complete the current wave. Later, it is likely to start a fresh increase above $9,000 unless there is a close below $8,200. Technical indicators: Hourly MACD – The MACD is about to move into the bullish zone. Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is currently rising and it is near the 50 level. Major Support Levels – $8,400 followed by $8,200. Major Resistance Levels – $8,800, $8,950 and $9,000.