Bitcoin bulls aren't out of the woods just yet, according to Goldman Sachs' technical-analysis team led by Sheba Jafari.
In a note sent to clients Sunday, Jafari and her team warn further selling is on the horizon and the February low of $5,922 a coin is in jeopardy now that short-term support at $9,210 is broken.
"The break is significant as implies potential for a more impulsive decline," Jafari said. "The next meaningful level is down at 7,687-7,198; includes the 200-dma and a 1.618 target off the high."
Bitcoin is off to a rocky start in 2018. The cryptocurrency came under intense selling pressure from mid-December to early February that shaved 70% off its value. It bottomed at $5,922 on February 6 before rallying to a high of $11,784 two weeks later.
But its price has struggled to break through $12,000, and it has fallen back below $10,000 amid stern warnings on the crypto space issued by the US Securities & Exchange Commission and reports that the large Japanese crypto exchange Binance was hacked. The cryptocurrency is down 31.5% this year.
As to how far bitcoin's price can fall, the Goldman team warns to pay attention to the mid- to low-$7,000 range, with the view that a breakdown of that level increases the likelihood of the February lows being taken out.
"The 200-dma in particular is important given that it held very well at the previous low in September," Jafari's team wrote. "Getting a close break this time around would warn of structural damage, increasing the risk of new local lows (<5,922). At this point, need to get back through 9,322 (the Feb. 26th low) for this to stabilize."
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