Bitcoin (BTC) has potentially completed its corrective structure after rebounding on November 19. It is imperative that the $ 56,500 support area holds for this to be true.
BTC declined significantly during the week of November 15-21 and created a bearish engulfing candlestick. This is a type of bearish candlestick in which all of the previous week’s rise is canceled out by the next drop.
Despite the continued increase, BTC is still trading just below the long term support area of $ 59,000 and is currently trading at $ 57,500. The same area previously acted as the all-time highest resistance between February and April and should now serve as support.
Short term movement
The daily chart shows that BTC is trading above the horizontal support at $ 56,500. This is the support level of the 0.382 Fib retracement (white) when measuring the recent part of the bullish move.
On November 19, BTC bounced off this support area (green icon) and is currently retesting it.
Despite the near-term rebound, technical indicators remain bearish as both MACD and RSI are down.
The decline is of particular concern for the RSI, which has fallen below the 50 mark (red circle). The RSI is an indicator of momentum, and the 50 line is often taken as a benchmark for whether the trend is bullish or bearish. The RSI was previously above 50 on September 29 (green circle), at the start of the rebound. The recovery of line 50 is mandatory for the uptrend to resume.
If a failure were to occur, the next support would be found at $ 53,250. This is the 0.5 Fib retracement support level.
The six hour chart shows that BTC is moving below a descending resistance line.
BTC wave count
The BTC wave count suggests that the entire movement since October 20 is part of an ABC corrective structure. Wave C had a ratio of 1: 1.61 to wave A, which is common in such structures.
Therefore, it is possible that the low has been reached and the BTC correction is complete.
The long term wave count is decidedly bullish and shows that BTC is inside a large 1-2 / 1-2 wave formation.
The short-term alternative count is slightly more bearish as it suggests that the November decline was wave A of an ABC structure.
However, this could mean that an upward movement towards the $ 62,400- $ 64,000 range still occurs before another decline. The number of subwaves is displayed in red
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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