Bitcoin Price Analysis: BTC Nosedived But Presents Buy Opportunity

After a sharp rally towards $8,400, bitcoin price started a major downside correction. BTC to USD declined more than $1,200 from the recent high and spiked below the $7,000 support area.

Key Takeaways: BTC/USD

• Bitcoin price traded as high as $8,390 before it nosedived below the $7.580 support against the US Dollar.
• BTC/USD broke the main $7,400 support and a crucial bullish trend line on the 2-hours chart (data feed from Bitstamp).
• Ethereum, ripple, and bitcoin cash are down more than 10% in the past three sessions.

Bitcoin Price Analysis

Earlier this week, we saw a strong rise in bitcoin price above the $7,000, $7,400 and $8,000 resistance levels. BTC price even rallied above the $8,200 level and traded close to the $8,400 level.

Looking at the 2-hours chart, bitcoin traded as high $8,390 and recently started a significant downside correction. There was a break below the a few important supports near $8,050, opening the doors for a sharp drop.

The price traded below the $8,000 support and a crucial bullish trend line on the same chart. The price settled below $8,000 and the 50 simple moving average (2-hours, purple). Besides, there was a sharp drop below the 61.8% Fib retracement level of the rally from $6,771 to $8,390.

Sellers took control and the price even spiked below the $7,200 and $7,000 support levels. More importantly, there was a spike below the last swing low at $6,771 and the price tested the $6,420 support area.

Moreover, the price tested the 1.236 Fib extension level of the rally from $6,771 to $8,390, and retreated sharply. The price is now trading above the $7,000 level, but with a bearish angle.

Therefore, there is a risk of a fresh decline in bitcoin price below the $7,000 support. It could retest the $6,840 support level and if sellers remain in action, BTC might drop back to $6,420.

Conversely, if bitcoin finds support near the $6,840 level, it could bounce back above the $7,200 and $7,320 resistance levels. In the short term, there may be more bearish moves or range moves before the price forms a decent support for the next wave up.