Bitcoin price started a downside correction after it broke $39,000 against the US Dollar. BTC tested the key $35,000 support and it is currently consolidating losses.

After forming a short-term top near the $42,000 level, bitcoin price started a downside correction. BTC broke a couple of important supports near the $40,000 level to start the current correction.

There was also a break below a key contracting triangle with support near $40,000 on the hourly chart of the BTC/USD pair. The pair settled well below the $38,000 level and the 100 hourly simple moving average.

There was also a spike below the 50% Fib retracement level of the upward move from the $29,894 swing low to $42,068 swing high. However, the bulls were seen active near the $35,000 support zone (the last key breakout zone).

The next major support is near the $34,500 level. It is close to the 61.8% Fib retracement level of the upward move from the $29,894 swing low to $42,068 swing high. If bitcoin fails to stay above the $35,000 and $34,500 support levels, it could start another decline. The next major support below $34,500 is near the $32,000 level.

If bitcoin stays above the $34,500 and $35,000 support levels, it could start a fresh increase. An initial resistance on the upside is near the $37,800 level. There is also a contracting triangle forming with resistance near $38,000.

A clear break above the $37,800 and $38,000 resistance levels may possibly spark a bullish wave. The next key resistance is near the $39,200 level and the 100 hourly simple moving average (the recent breakdown zone). A close above $39,200 might increase the chances of a fresh wave towards the $42,000 level.

Technical indicators:

Hourly MACD – The MACD is gaining momentum in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD dipped below the 40 level.

Major Support Levels – $35,000, followed by $34,500.

Major Resistance Levels – $37,800, $38,000 and $39,200.

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