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Bitcoin's chart outlook darkened on Tuesday after it broke below the neckline of a massive head-and-shoulders top formation at 30,393, bringing closer a test of key chart support that could potentially wipe roughly 40% off its current value.

The neckline break suggests a test of the 61.8% Fibonacci retracement -- at 27,169 -- of its astounding 3,850-64,895 pandemic trading range could be next on the agenda.

If it falls through that support, near the approaching top of the weekly ichimoku cloud, and closes below there, charts suggest it could tumble to the 18,000 vicinity. That's where December 2020's low, the 76.4% Fibonacci and 161.8% Fibonacci-projected low off this April's trend high range at 17,570/700/8,056 converge.

To be sure, there are uncertainties in interpreting chart signals. Though bitcoin fell to a 5-1/2-month low of 28,600 on Tuesday, the slide stopped before breaching the 55-week moving average, support which has proved pivotal since last March, and then doggedly erased its losses.

Also, though weekly and monthly RSIs have yet to become oversold, dailies have, so a weekly close below 61.8% Fibonacci support at 27,170 could be important in confirming a broader breakdown.

If the breakdown occurs, the weekly cloud base at 22,925 into August is potential interim support.

Thus, prices would have to rally roughly 30% to clear last week's 41,341 high by the broken 38.2% Fibo at 41,576 and to negate this week's breakdown. For more click on

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Bitcoin on the verge of a purge toward December low - Economic Times