• Bitcoin price formed a double top pattern near $8,330 and declined sharply against the US Dollar.
• The price broke the key supports near $8,000, $7,650 and $7,200 to test the $6,800 support area.
• This week’s followed bullish trend line was breached with support at $7,850 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The price tested a crucial support area near $6,700-6,800 and bounced back above $7,100.

Bitcoin price started a major downside correction below $8,000 against the US Dollar. BTC formed a double top pattern, but it is now trading close to a few crucial supports near $6,800.

Bitcoin Price Analysis

Recently, bitcoin price made another attempt to climb above the $8,330 and $8,350 resistances against the US Dollar. The BTC/USD pair failed to climb above $8,350 and formed a major double top pattern. As a result, there was a sharp decline below the $8,000 support area. Besides, there was a clear break below the $7,800 support area and the 100 hourly simple moving average.

More importantly, this week’s followed bullish trend line was breached with support at $7,850 on the hourly chart of the BTC/USD pair. The pair declined more than 10% and broke the $7,450 and $7,000 support levels. It spiked towards the $6,650 support area and formed a swing low at $6,645. Recently, it recovered nicely above the $7,000 level and the 23.6% Fib retracement level of the latest drop from the $8,048 high to $6,645 low. The price is now trading above $7,200, but it is facing a strong resistance near $7,350 and $7,400.

Moreover, the 50% Fib retracement level of the latest drop from the $8,048 high to $6,645 low is also acting as a barrier for the bulls. If there is a successful close above $7,400, the price could rebound towards the $7,700 level. Besides, it might test the 76.4% Fib retracement level of the latest drop from the $8,048 high to $6,645 low. Conversely, if the price fails to surpass the $7,400 resistance, it is likely to decline again. An initial support is near $7,000, below which there is a risk of a sharp decline towards the $6,800 or $6,650 support zone.

Looking at the chart, bitcoin price clearly corrected lower significantly below $8,000 and $7,500. However, the $6,800 and $6,650 support levels are important buy zones. In the short term, the price could consolidate near $7,000 before it starts a fresh increase.

Technical indicators:

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

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD declined sharply below the 40 and 30 levels.

Major Support Levels – $6,800 followed by $6,650.

Major Resistance Levels – $7,400, $7,700 and $7,850.