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Bitcoin (BTC) bounced off minor diagonal support around $40,000 but could still test the $37,000-$38,000 support area.
Bitcoin formed a local high of $48,189 on March 28 and has been losing ground ever since. As a result, on April 11, the BTC rate sank to a minimum of $39,200.
The price may have rebounded from the ascending support line (solid line) that has been present on the chart since January 22.
However, technical indicators give bearish signals. The RSI has broken through the rising support line and is now below the 50 mark, which is a bearish sign.
Also, the last time this indicator went below 50 (red icon), it caused the coin to drop to January lows of $32,917.
If BTC heads south again, then the ascending support line (dotted line) at $37,500 will come into play.
Bearish channel breakout
On the 2-hour chart, Bitcoin made a bearish breakout from a descending parallel channel and then turned it into resistance on April 11 (red icon). This event preceded the acceleration of the bearish move in BTC.
If the price drawdown continues, the nearest support area will meet the market in the $37,800 area.
Unlike the daily RSI, the RSI on the 2-hour timeframe is giving bullish divergence signals (green line) and is at its most oversold levels since January.
However, the market is not yet showing any signs of a bullish reversal.
wave analysis BTC
Results of the long-term wave analysis indicate the likelihood of price growth towards the $50,000 area. However, first BTC may form another short-term low.
As for the short-term outlook, here we can assume that the current decline is in the form of an ABC corrective structure (black). The ratio of waves A and C as 1:2.61 will determine the formation of a low at $37,110.
The results of the sub-wave and small sub-wave analysis are presented on the graph in red and yellow, respectively.
In addition, the $37,100 target will take BTC to the support line of a potential ascending parallel channel.
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