- Bitcoin has been recovering from Sunday’s low.
- A move above $4,000 will improve the short-term technical picture.
- Longer-term resistance is located at $6,000.
Bitcoin is trading at $3,960 at the time of writing as the market has calmed down after a wild weekend. The largest cryptocurrency crashed under $4,000 and even touched area below $3,500 handle; however, panic selling has not happened as of yet. While this is a good signal, the price needs to get back above $4,000 as soon as possible to mitigate immediate bearish setup.
The cryptocurrency market lost over $50B of its value since the previous Monday, living through its worst week. BTC/USD was trading at $5,500, which translates into a 30% collapse on a weekly basis. Moreover, the largest cryptocurrency is down over 80% from its all-time high.
Looking technically, Bitcoin started to reverse on approach to weekly SMA200 (currently at $3,156), which means that this area is going to serve as a good support and a jumping-off ground for the price once the downside resumes. However, a sustainable movement above $4,000 handle during Monday trading is likely to create a good setup for further recovery during the next several sessions with the critical resistance at $6,000 strengthened by SMA 100 weekly (currently at $5,880) and DMA50 ($5,905).
Bitcoin bulls will claim short-term victory once this area is cleared as the price will return to the pre-collapse range.
On the short-term timeframe, we have a resistance around $4,100 handle, created by Sunday’s high and previous 4-hour high. It is followed by $4,440 (23.6% Fibo retracement weekly).
The downside is likely to be limited by $3,700 (Pivot Point 1-month, Support 1). Once below, the sell-off will continue to $3,500 with Pivot Point 1-day Support 1 on approach.
BTC/USD, the daily chart
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