- BTC/USD rose to a fresh two-week high near $39,000 on Friday.
- Sharp pullback suggests that sellers look to retake control.
- Next line of defence is located around $32,000.
Bitcoin gained traction in the late American session on Friday and touched its highest level in two weeks near $39,000. However, BTC/USD failed to preserve its bullish momentum and staged a sharp technical correction to close the day modestly higher at $34,270. On Saturday, Bitcoin remains on the back foot and was last seen losing 1.1% at $33,870.
Critical support aligns at $32,000
With Friday's upsurge, BTC/USD broke above the descending trend line coming from January 14 that can be seen on the four-hour chart. However, sellers took control of the price action as soon as the Relative Strength Index (RSI) on the same chart reached the overbought area above 70, suggesting that buyers showed no interest in defending the upside.
Currently, the 200-period SMA at $33,800 seems to be limiting Bitcoin's downside. Below that level, the next support could be seen at $32,000, where the trend line is located.
BTC/USD four-hour chart
Moreover, the 23.6% Fibonacci retracement of the three-week downtrend seen in January is reinforcing the $32,000 area. If Bitcoin manages to hold above that level in the near term, it could reverse its direction, once again. On the upside, the first resistance aligns at $35,500 (Fibonacci 50% retracement) ahead of $37,000 (Fibonacci 61.8% retracement) and $39,000 (Jan. 29 high).
BTC/USD one-day chart
Friday's impressive rally failed to attract bulls and BTC/USD fell sharply. However, the broken descending trend line suggests that Bitcoin could try to turn north. As long as $32,000 support holds, additional gains could be expected. On the other hand, a drop below $32,000 is likely to cause the technical outlook to turn bearish.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.