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Key Takeaways
- Bitcoin has tumbled this week, a move that kicked off Sunday, when over $1.5 billion in leveraged-long positions in the cryptocurrency were liquidated.
- Since a bearish engulfing pattern marked the digital asset’s record high last month, the price has trended lower within an orderly descending channel, recently falling below the 50-day moving average.
- Investors should watch major support levels on bitcoin’s chart around $107,000 and $102,000, while also monitoring resistance levels near $117,000 and $123,000.
Bitcoin (BTCUSD) prices have tumbled this week, squelching a rally that had taken the cryptocurrency back within sight of the all-time high set last month.
The sell-off started Sunday, when over $1.5 billion in leveraged-long positions in bitcoin were liquidated. Bitcoin dropped below $109,000 late Thursday, hitting its lowest level in a month. The digital currency was trading around $110,000 Friday afternoon, down about 5% from a week ago and 10% from its record high set in mid-August.
Below, we take a closer look at Bitcoin’s chart and use technical analysis to identify key price levels worth watching out for.
Descending Channel Takes Shape
Since a bearish engulfing pattern marked bitcoin’s record high last month, the cryptocurrency has trended lower within an orderly descending channel.
Earlier this month, the digital asset encountered selling pressure near the pattern’s upper trendline, with bears recently driving the price below the 50-day moving average.
Meanwhile, the relative strength index has swung from bullish to bearish territory over the last week to confirm weakening price momentum. It’s also worth noting that trading volume on Coinbase (COIN), the largest crypto exchange in the U.S., has remained subdued in recent months, indicating lackluster investor interest.
Let’s identify key support and resistance areas on bitcoin’s chart that investors will likely be monitoring.
Key Support Levels to Watch
Further near-term weakness could see the cryptocurrency’s price initially test the $107,000 level. This area may provide support near last month’s swing low and two prominent peaks that formed on the chart in December and January.
A close below this key support level could bring the $102,000 region into play. Buyers may look for entry points in this location near the low of the descending channel and a trendline that connects several peaks and troughs on the chart stretching back to December.
Resistance Levels Worth Monitoring
During upswings, investors should monitor the $117,000 level. The price may run into overhead resistance here near this month’s retest of the descending channel’s top trendline and a period of sideways drift that developed on the chart throughout the second half of July.
A bullish breakout above this level could see bitcoin’s price climb to around $123,000. This region on the chart would likely attract significant attention near several peaks sitting just below the cryptocurrency’s all-time high.
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As of the date this article was written, the author does not own any of the above securities.
