Bitcoin price surged towards the $18,500 level before correcting lower against the US Dollar. BTC must stay above $17,500 for upside continuation in the near term.

• Bitcoin rallied further towards the $18,500 level before correcting lower sharply.
• The price is holding the key $17,500 support and it is well above the 100 hourly simple moving average.
• There is a major contracting triangle forming with resistance near $18,020 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair could start a fresh rally if there is a proper close above $18,000 and $18,200.

Bitcoin Price Holding Key Supports

Yesterday, there was a sharp increase in bitcoin price above the $17,500 resistance level. BTC climbed over 10% and it even broke the $18,000 level. The price traded to a new multi-month high near $18,500 before it started a sharp decline.

The price crashed over $1,000 and it broke the $17,800 support. There was also a spike below the $17,500 support, but there was no close below it. The recent swing low was formed near $17,299 and the high was formed near $18,107.

The price is now consolidating gains below $18,000. There is also a major contracting triangle forming with resistance near $18,020 on the hourly chart of the BTC/USD pair. The pair is testing the 23.6% Fib retracement level of the recent wave from the $17,299 swing low to $18,107 high.

Source: BTCUSD on TradingView.com

The first major support seems to be forming near the $17,700 level and the triangle lower trend line. It is close to the 50% Fib retracement level of the recent wave from the $17,299 swing low to $18,107 high.

If there is a downside break below the triangle support, the price could test the $17,500 support. A proper close below the $17,500 support might start a strong decline in the coming days.

Fresh Rally in BTC?

If bitcoin clears the triangle resistance and then the $18,107 swing high, it could rally again. The next immediate hurdle is near the $18,200 level.

A proper follow through move above the $18,200 level is likely to open the doors for a larger increase. The next major resistance is near $18,500 and $18,880.

Technical indicators:

Hourly MACD – The MACD is slowly losing momentum in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is currently well above the 50 level.

Major Support Levels – $17,700, followed by $17,500.

Major Resistance Levels – $18,020, $18,200 and $18,500.