Bitcoin Breaks $40K, Key Upside Break Suggests Trend Change

Bitcoin started a big surge above the $40,000 resistance against the US dollar. BTC may correct lower, but the downsides may be limited to less than $40,000.

Bitcoin was able to clear the $40,000 resistance and moved into positive zone. The price is trading above $40,500 and the 100 hourly simple moving average. A major bullish trendline is forming with support near $39,250 on the hourly chart of the BTC/USD pair (Kraken data feed). The pair may correct lower, but significant support is forming near the $40,000 zone.

Bitcoin price rises 5%

Bitcoin price established a base above the $38,000 level. BTC started a steady rise above the $39,550 resistance level and the 100 hourly simple moving average.

It opened the doors for a move above the $40,000 resistance. The bulls took control and were able to push the price above the $41,000 resistance zone. The price was up more than 5% and there was a move towards $41,800. It highs near $41,706 and the price is now correcting gains.

It traded below the $41,000 level. There was a test of the 23.6% Fib retracement level of the recent surge from the $38,170 swing low to $41,706 high.

On the downside, there are many support levels near $40,000. A major bullish trendline is also forming with support near $39,250 on the hourly chart of the BTC/USD pair. On the upside, bitcoin may face resistance near the USD 41,200 level.

Source: BTCUSD on TradingView.com

The next major resistance could be near the recent high of $41,800. A clear move above the $41,800 level could even push the price above the $42,000 resistance. In the mentioned case, the price could rise towards the $43,200 level.

Dips limited in BTC?

If bitcoin fails to clear the $41,200 resistance zone, it could trigger a downside correction. An immediate support on the downside is near the $40,500 zone.

The next major support is seen near the USD 40,000 level. It is near the 50% Fib retracement level of the recent wave from the $38,170 swing low to $41,706 high. The main support is now near the trendline and at $39,000.

Technical indicators:

Hourly MACD – The MACD is now losing pace in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is well above the 50 level.

Key Support Levels – $40,500, followed by $40,000.

Major resistance levels – $41,200, $41,800 and $42,000.

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