Bitcoin price was dumped yesterday by over 20% against the US Dollar. BTC is recovering from $30K and it might attempt a bullish reversal above $40K.

• Bitcoin tumbled below the $40,000 and $35,000 support levels.
• The price is now trading well below $42,000 and the 100 hourly simple moving average.
• There is a crucial bearish trend line forming with resistance near $39,000 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair is likely to start a strong bullish move if there is a break above $40,000.

Bitcoin Price Starts Recovery

Bitcoin failed to stay above the $42,000 and $42,000 support levels. BTC tumbled over 20% and it broke many important supports near $35,000. There was also a spike below the $32,000 support zone.

A low was formed near the $29,750 and the price is now correcting higher. It broke the $35,000 resistance zone. There was also a break above the 50% Fib retracement level of the recent drop from the $45,775 swing high to $29,750 swing low.

However, the price is trading well below $42,000 and the 100 hourly simple moving average. An immediate resistance is near the $39,000 level.

There is also a crucial bearish trend line forming with resistance near $39,000 on the hourly chart of the BTC/USD pair. The trend line is close to the 61.8% Fib retracement level of the recent drop from the $45,775 swing high to $29,750 swing low.

Source: BTCUSD on TradingView.com

A successful break above the trend line resistance could set the pace for a strong move above the $40,000 resistance. The next major resistance is near the $42,000 level. A close above the $42,000 level could set the pace for a strong rally in the coming sessions. The next major resistance sits near the $46,000 level.

Fresh Drop in BTC?

If bitcoin fails to clear the $39,200 and $40,000 resistance levels, there is a risk of a fresh decline. An initial support on the downside is near the $36,000 level.

The first major support is now forming near the $34,000 zone. A downside break below the $34,000 support could start a fresh decline towards the main $30,000 support zone in the near term.

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 likely to surpass the 50 level.

Major Support Levels – $36,000, followed by $34,000.

Major Resistance Levels – $39,000, $40,000 and $42,000.