Bitcoin is resuming its slide after bouncing off the resistance marked earlier on. Applying the Fib extension tool shows the next potential downside targets.
Price is currently testing the 61.8% extension right now around the swing low, where some buyers might still be looking to buy on dips or defend support zones. In that case, bitcoin might still recover to the channel resistance around the $4,000 major psychological mark.
The 100 SMA is below the longer-term 200 SMA, though, so the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. The 100 SMA also seems to be holding as dynamic resistance also and might continue to keep further rallies in check.
RSI is on its way down but appears to have bottomed out, so a move higher from the oversold region could be in the works. In that case, support zones might hold and push bitcoin back up to the channel top or perhaps even for a breakout. A move past the swing high could confirm that a reversal is underway, but bitcoin has to clear the 200 SMA dynamic resistance to draw more bullish momentum.
This is looking like a long stretch, though, as the latest slump shows that bulls are still being cautious with their holdings and booking profits very quickly. Selling pressure is also evident and could accelerate on a break of the 61.8% extension.
From there, bitcoin could slide to the 78.6% extension next at the channel bottom of $3,600. Stronger selling pressure could take it down to the full extension at $3,400 or even lower.
A number of catalysts are being blamed for the slide in bitcoin but it looks like momentum is what’s in play for now, with the FUD sentiment just worsening the decline. There appears to be no potential catalyst in sight that could unwind these losses, so traders might keep dumping their holdings.