Bitcoin (BTC) reached a high of $40,112 on Jan. 14 but was rejected immediately after and has been decreasing since.
While the long-term trend is likely bearish, the short-term trend remains bullish as long as Bitcoin is trading above $36,717.
Hidden Divergence Causes Bitcoin Pump
BTC has been moving upwards since reaching a local low of $30,402 on Jan. 11. It created a long lower wick just above the 0.382 Fib retracement level of the most recent upward movement.
BTC increased to $40,112 on Jan. 14 before getting rejected.
Technical indicators in the daily time-frame are bearish. While the RSI has generated a significant hidden bullish divergence, a price increase has already occurred as a result.
The MACD is moving downward and the Stochastic oscillator has made a bearish cross. These are both strong signals that the trend is bearish.
Future Movement
The six-hour chart shows that BTC has been rejected at the 0.786 Fib retracement level, which previously acted as support. Therefore, the $39,463 area is now confirmed as resistance.
Despite the rejection, technical indicators are still bullish and there is an ascending support line currently at $34,000. This means that it’s possible that the short-term trend is still bullish.
The two-hour chart shows that BTC is following another, shorter-term ascending support line. This line is currently just below the $37,143 support area, which is the 0.382 Fib retracement of the most recent upward movement.
As long as BTC is trading above this support area/line, the short-term trend is still considered bullish.
BTC Wave Count
The wave count shows that BTC has possibly completed an A-B-C corrective structure.
Yesterday, BTC was rejected by the resistance line of a parallel ascending channel, which suggests that the movement is corrective.
While the A-B-C correction looks completed, it’s still possible that wave 5 will extend.
Therefore, until BTC falls below the $36,717 sub-wave 4 low (shown with the red line), it’s possible that the upward move will continue. It could potentially reach a high of 42,603, which would give waves A:C a 1:1.61 ratio.
While it’s possible that the BTC trend is in wave 4, it doesn’t fit with the longer-term count.
Furthermore, the invalidation level would be the same. So, for the time being, it doesn’t seem worth it to track this count.
Conclusion
While Bitcoin seems to be nearing the top of its corrective movement, the short-term trend is considered bullish as long as BTC is trading above $36,717.
Where do you think the Bitcoin price is going?
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Until next time, stay classy crypto world!
