Bitcoin is stabilizing but could still fall 24% if it breaks below this key support level, technical analyst says

Bitcoin is stabilizing but could still fall 24% if it breaks below this key support level, technical analyst says
  • Bitcoin prices are beginning to stabilize after falling 30% in a month, according to Katie Stockton of Fairlead Strategies.
  • But the cryptocurrency could see further price declines if key support around $44,200 fails, Stockton said in a Monday note.
  • "If initial support is broken, important long-term support will likely be tested, near $37.0K," Stockton said.
  • 30% price decline has brought a swift bear market for the cryptocurrency, but prices are beginning to stabilize, according to technical analyst Katie Stockton of Fairlead Strategies.

    Stockton said in a Monday note that short-term momentum for bitcoin has neutralized after being bearish for a number of weeks. That's a good sign for crypto bulls as bitcoin consolidates above its initial support level of $44,200, which represents a 61.8% Fibonacci retracement level.

    "An improved daily [moving average convergence divergence] and short-term oversold conditions suggest bitcoin could see stabilization around initial support in the days ahead," Stockton explained.

    But intermediate momentum remains bearish, meaning the potential for more downside in bitcoin prices remains, according to Stockton.

    "The weekly stochastics are not yet oversold, suggesting the correction will resume. If initial support is broken, important long-term support at the bottom boundary of the weekly cloud will likely be tested, near $37,000," Stockton said.

    A decline to $37,000 would represent potential downside of 24% from current levels. Still, long-term momentum remains bullish, so any decline could be temporary if the monthly MACD doesn't flash a sell signal, according to the note.

    "There has been a downtick in long-term momentum that has us watching the monthly MACD closely, but we maintain a long-term bullish bias with the rising weekly cloud still intact," Stockton concluded.

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