Bitcoin reverse losses, but why $40K is still the key?

Bitcoin found support near $34,300 and started a strong recovery against the US dollar. BTC climbed above $38,000, but it is still struggling near $40,000.

Bitcoin found support near the $34,300 and $34,500 levels. The price is trading above $38,000 and the 100 hourly simple moving average. A major bullish trendline is forming with support near $37,600 on the hourly chart of the BTC/USD pair (Kraken data feed). The pair could see further gains if there is significant movement above USD 39,500 and USD 40,000.

Bitcoin Price Gaining Momentum

Bitcoin price extended decline below the $35,000 support zone. However, BTC found support near the $34,300 and $34,500 levels. A low was formed near $34,333 and the price started a strong upward move.

The price climbed above the $36,500 and $37,000 resistance levels. The bulls were able to push the price above the $38,000 level and the 100 hourly simple moving average. It even peaked above the USD 39,500 resistance level, but there was no upward continuation.

It highs near $39,739 and the price is now consolidating gains. It traded below the 23.6% Fib retracement level from the upward move from the $34,333 swing low to $39,739 high.

Bitcoin is now trading above $38,000 and the 100 hourly simple moving average. A major bullish trendline is also forming with support near $37,600 on the hourly chart of the BTC/USD pair.

Source: BTCUSD on TradingView.com

On the upside, there is an immediate resistance near the $39,200 level. The next key resistance is near the USD 39,500 level. The main resistance is still near the USD 40,000 level. A clear move above the $40,000 resistance could send the price further up. In the case mentioned, it could even test $41,200.

Dips limited in BTC?

If bitcoin fails to clear the $39,500 resistance zone, it could trigger a downside correction. An immediate support on the downside is near the $38,000 zone.

The next major support is seen near the $37,800 level and the trendline. If there is a downward breach below the trendline support, the price could gain bearish momentum towards $36,000.

Technical indicators:

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

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

Key support levels – $38,000, followed by $37,800.

Major resistance levels – $39,200, $39,500 and $40,000.

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