Key Bitcoin Levels to Monitor as Price Falls Below $110,000 for the First Time Since Early July

Key Takeaways

• Bitcoin plummeted to its lowest level in seven weeks on Tuesday, reversing the gains secured at the end of last week after Federal Reserve Chair Powell hinted at a potential interest rate cut. 

• After hitting a new all-time high on August 14, the cryptocurrency has shifted direction, potentially signaling a bull trap—a trading scenario where prices initially rise before sharply reversing, causing unexpected losses for investors.

• Investors should vigilantly monitor key support levels on Bitcoin's chart around $107,000 and $100,000, while also keeping a close watch on resistance areas near $117,000 and $123,000.

Bitcoin (BTCUSD) dropped to its lowest point in seven weeks on Tuesday, wiping out the gains achieved at the end of last week after Fed Chair Powell hinted at a potential interest rate cut.

The leading cryptocurrency has been under pressure as several large investors have reportedly liquidated positions and bitcoin ETF outflows have increased. Bitcoin has fallen approximately 12% since reaching a record high of over $124,000 on August 14. The digital currency dropped to as low as $108,700 this morning, marking its lowest level since July 9.

Below, we analyze Bitcoin’s chart and employ technical analysis to identify price levels that investors are likely to monitor.

Potential Bull Trap Emerges

Since hitting its all-time high less than two weeks ago, Bitcoin has reversed direction, potentially signaling a bull trap—a trading scenario where prices initially rise before sharply reversing, causing unexpected losses for investors.

Notably, as the leading cryptocurrency reached a new high, the relative strength index formed a comparatively lower high, creating a bearish divergence between the price and the indicator, indicating diminishing buying interest.

We will identify two critical support levels on Bitcoin’s chart to monitor if the price continues to decline and also highlight resistance areas worth observing during potential recovery attempts.

Key Support Levels to Watch

The first lower level to monitor is around $107,000. Investors might consider accumulating BTC near the significant December and January peaks, a chart area that could transition from previous resistance to future support.

Selling below this level could lead to a retracement toward the closely watched $100,000 area, currently just below the upward sloping 200-day moving average (MA). This location would likely attract buying interest near a horizontal line that connects a range of corresponding trading activity on the chart between November and June.

Resistance Areas Worth Monitoring

During recovery efforts, investors should closely observe the $117,000 level. The cryptocurrency may encounter selling pressure in this area, which is near last week’s unsuccessful retest of the 50-day MA and a sideways trend that developed on the chart in the latter half of July.

Ultimately, a bullish reversal to the upside could trigger a rally towards $123,000. Investors who acquired BTC during the current pullback might consider identifying exit points near this month’s closing high, which is also closely aligned with last month’s peak.