Bitcoin (BTC) sellers are in control as the cryptocurrency broke below initial support at $42,000 on Tuesday. BTC was trading around $39,000 at the time of writing and could see further declines towards the next level of support around $34,000. Price recoveries should remain limited at short-term resistance levels between $42,000 and $45,000.
- The relative strength index (RSI) on the daily chart has been oversold for the past few days. However, an oversold reading of 25 is not as deep as the March 2020 reading around 14, which suggests selling pressure could persist over the short term.
- The weekly RSI continues to recede from extreme overbought levels and is not yet oversold. This indicates further selling pressure towards lower support zones.
- The next level of support is seen at around $34,000, which could stabilize the sell-off.
- The intermediate-term trend is shifting from bullish to bearish as price is roughly 20% below the 100-day moving average.
- Bitcoin is now down about 30% month to date and has ended months of consolidation to the downside. Breakdowns typically lead to rising volatility and longer drawdown periods.
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