Bitcoin (BTC) dipped below $40,000 on Friday, the midpoint of a three-month long trading range. The cryptocurrency could find support at $37,500, although upside appears to be limited toward the $46,000 resistance level.
BTC was trading around $39,400 at press time and is down by 5% over the past 24 hours. So far this year, BTC is down by 17%, compared with a 9% loss in the S&P 500 and a 6% gain in gold over the same period.
A positive momentum signal on bitcoin’s daily chart was invalidated on Thursday, which typically precedes a period of price weakness. On the weekly chart, however, momentum remains slightly positive, suggesting that rangebound trading could persist over the next few days.
Most technical indicators are neutral, although a significant loss of upside momentum on the monthly chart increases the probability of a break below BTC’s year-long price range. Further, the recent increase in sell volume relative to buy volume means traders have been reluctant to maintain long positions after the 2020 crypto rally.
For now, the upward sloping 100-week moving average, currently at $35,693, has kept the uptrend intact. If price breaks below that level, the next support zone is between $27,000-$30,000.
