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Bitcoin has almost reached the resistance line of the short-term pattern. The further direction of the short-term trend will depend on whether it succeeds BTC make a bullish breakout of this level.
Bitcoin has been declining since December 27 within a descending parallel channel. As a result, on January 10, the price formed a local minimum of $ 39,650. From here, BTC rebounded and tried to strengthen.
The upside attempt resulted in a price recovery above the December 4 low (red line), which was recently absorbed by the market.
At the time of writing, BTC is trading near the resistance line of this channel. Its bullish breakout could initiate an upward phase towards the $ 45,900 area (Fibo 0.5 retracement level and horizontal resistance area).
Potential bullish breakout
Technical indicators support the likelihood of a bullish breakout as both MACD and RSI rise.
The MACD indicator has almost entered the green zone. This means that the short-term MA is moving faster than the long-term MA, which is considered a sign of a bullish trend.
Meanwhile, the RSI has advanced above 30 and is now preparing to hit the 50 barrier. As with the MACD, a rise above 50 is seen as a bullish trend signal.
A source: TradingView
Wave analysis BTC
Long-term wave analysis results remain mixed, however shorter-term patterns suggest that Bitcoin has completed the formation of a five-wave downtrend structure (black).
However, the fifth wave looks relatively short, since it failed to reach the target area of $ 36 100 – $ 36 500 (the ratio of waves 1 and 5 as 1: 1, shown in the chart in black), as well as the Fibo level 1.61 of the external correction of wave four (white ).
The results of the subwavelength analysis are shown on the chart in red.
A source: TradingView
On closer inspection, you can see that subwave 5 was also too short relative to subwaves 1 and 3. Its length is less than 0.618 of the length of subwave 1. Thus, it is possible that BTC is still inside subwave 4, and the price decline will continue further one throw to the south in the direction of the target we had selected earlier.
If this move widens, and if we get a 1: 1 ratio of waves 1 to 5, the BTC rate could hit a low of $ 36,900. This correlates better with our longer term target.
The further scenario will depend on whether the price manages to make a bullish breakout of the channel resistance line or bounce off it.
Either way, it looks like Bitcoin is already very close to bottoming out.
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