Bitcoin breaks below $40k as the market sell pressure continues to mount. It also breached the $39.5k zone and found support at $38k before moving up. This was an expected move as Bitcoin was unable to move up from $40k and didn’t have much volume. But since $40k is such an important level, it will now act as a strong resistance, and recovery might not be that easy. There is also a bearish trendline forming near $39.5k, which could also act as a resistance.
Bitcoin price action
If you take a look at the Bitcoin charts for the past 3 to 4 weeks, it will be apparent that the price was stuck between $42k-$45k for a long period. And this confirmed that $42k would be important support as it pushed the price to retest $45k quite a few times before Bitcoin corrected lower. At present, it is trading at $39.3k, which is the 50-hour EMA. Above this, we have the $40k resistance and the 100-hour moving average at $40.1k.
This means that the price might not be able to move above $40k that easily because of the resistances. We need to keep an eye on the $38k level, which is critical support. If it breaks, Bitcoin might move to $37k or even lower. There is also a downtrend forming in the 1-hour chart, and currently, we are testing this trendline.
In case Bitcoin is able to break the $40k resistance, eyes should be kept on the $42k level, which is also bound to act as a resistance. Even in the previous rally during July and August 2021, it took multiple retests to break the $40k-$42k level.
What to do?
The price of Bitcoin is below $40k, and it is a great price to DCA if you bought much higher. Don’t go all in and look for the price action near $40k-$42k. In case these levels are broken, you can buy some more or see if BTC retests the $38k level. After $38k, the next support is $36.8k which could provide some support to the price. In case you are taking trades, look out for these levels attentively.
What are your thoughts as Bitcoin breaks below $40k and extends losses to $38k? And do you think we will move above $40k again in the short term? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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