Bitcoin tests important price level after dramatic plunge

  • Technical strategists say bitcoin looks to be in the process of finding a price floor.
  • The analysts are watching the 100-day moving average, as a level the cryptocurrency has held in the past.
  • If bitcoin has found a bottom, it could then test resistance at the 50-day moving average at around $14,500. If not, it could take another ride down to its 200-day moving average at around $7,100.

While bitcoin may look like it will continue to crash and burn, some strategists say its chart suggests it could be trying to find at least a temporary price floor.

Technical analysts say it's way too soon to say whether the price of the cryptocurrency is bottoming, after its stunning collapse, but they are watching the 100-day moving average on the bitcoin chart.

Citigroup analysts, however, see no bottom yet, and they are expecting a rapid fall to around $5,600.

Bitcoin prices, and therefore charts, vary, but some technicians put the 100-day moving average right around $10,000. Bitcoin fell through that level Wednesday. Other data puts the 100-day closer to $9,000. According to CNBC.com's chart, bitcoin hit a low Wednesday of $9,230, less than half its all-time high reached in December. It was just above $10,000 in afternoon trading, down about 13.5 percent.

"It held the 100-day, which it hasn't been below in over two years," said T3Live.com partner Scott Redler, who follows short-term technicals.

"Bitcoin is testing an important level. ... Bitcoin is searching for a spot to find support. It seems to have found it at the 100-day which it has for the past two years or so. The question is what type of bounce," he said. "Now the 50-day which has been support for the past year could now pose as resistance."

The 50-day moving average is just around $14,500, according to Redler's chart. He uses Tradeview data.

"So if the bounce is 'feeble' off the 100-day, the 200-day is usually the likely spot. We'll see if the 50-day that was support for the past year turns into resistance," he said. The 200-day moving average is around $7,100 on Redler's.

The Citi analysts, however, say a gap to the 200-day could come quickly. On their chart, the 200-day is $5,658.

Redler said bitcoin's chart had flashed a major warning.

"I was very cautious on it when it broke $17,000 because it broke the momentum trend ," he said, adding it is looking to be at a more constructive level now.

Source: T3Live.com

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