Bitcoin Makes a Sharp Correction after Hitting the $40k Psychological Price Level

For the past 48 hours, Bitcoin has been in a downward move after breaking below the $38,000 support. The king coin slumped to $32,800 but pulled back above $34,000 support.

The $34,000 support was the previous resistance level that was broken. BTC price broke that level to reach the psychological price level of $40,000. The momentum extended to $41,649 high. Bitcoin faced rejection at the recent high as the crypto resumed a downward move.

The rejection was as a result of the overbought condition of Bitcoin. The BTC price has remained in the overbought region after breaking the $20,000 overhead resistance. The recent rallies have pushed RSI to the overbought region of the market. On the upside, if the $34,000 support holds, Bitcoin will resume upside momentum. Conversely, if the $34,000 support fails to hold, the BTC price will further decline to $29,500 low.

Bitcoin indicator reading

The coin is above the 80% range of the daily stochastic. It indicates that altcoin is in the overbought region. The stochastic bands are sloping below the 80% range, indicating that the coin has bearish momentum. However, if price retraces and breaks below the bullish trend line, it is assumed the uptrend has been reversed.  

Key Resistance Zones: $40,000, $41,000, $42,000

Key Support Zones: $20, 000, $19, 000, $18,000             

What is the next direction for BTC/USD?

Initially, the BTC price fell to $32,800 and corrected upward. The coin faced another rejection at the $36,000 high. The crypto has resumed a fresh downward move. On January 10 downtrend; a retraced candle body tested the 50% Fibonacci retracement level. The retracement gives the impression that BTC will fall to 2.0 Fibonacci extensions. That is a low of $29,480.20. The Fibonacci tool has indicated a further downward move to that level.

Disclaimer. This analysis and forecast are the personal opinions of the author that are not a recommendation to buy or sell cryptocurrency and should not be viewed as an endorsement by CoinIdol. Readers should do their own research before investing funds.