As mentioned earlier, there hasn’t been any relief for technology stocks or cryptocurrencies at the start of the new week. But at the time of writing, Bitcoin was sharply of its earlier low after dipping below the $40K handle.
It is important to note that Bitcoin is testing a major support area here and what happens next will be key insofar as direction for the next few days are concerned.
As well as a psychologically-important level, the area around $40K marks the convergence of previous support and this bullish trend line:
Source: ThinkMarkets and TradingView.com
It is possible that after a major dip like, we could see dip buyers return here, supporting prices. However, if support breaks down decisively then we will have to wait a little longer before prices potentially bottom out.
So, keep a very close eye on Bitcoin here for bottoming signs. What the bulls will want to see here is daily hammer or bullish engulfing, or the like, here.
Ideally, this should happen as soon as possible – within the next few days. However, if price doesn’t start rising soon in the way we have highlighted the possibility, then this would likely precede further short-term weakness.
