Bitcoin (BTC) was rejected by the $44,200 resistance area on Jan 13 and is currently trying to find support.
On Jan 22, BTC broke out from a descending parallel channel that had previously been in place since Dec 27. This was a sign that the correction had come to an end.
It continued to increase until it reached a high of $44,500 on Jan 13. The high was made right at the 0.382 Fib retracement resistance level when measuring the previous downward movement.
While there was stronger resistance at $45,800, BTC failed to reach it.
After the rejection, BTC dropped and has now returned to the $42,100 area, which previously acted as resistance. The area is now expected to act as support.
Future BTC movement
The two-hour chart shows that BTC is trading between the 0.382 – 0.5 Fib retracement support levels at $42,100 – $42,650. This is a strong support area that could initiate a bounce.
There is support all the way down to $41,500, the 0.618 Fib retracement support level, which is also a horizontal support area.
However, the daily chart provides mixed signals. While the MACD has generated successive higher momentum bars, a sign of a potential reversal signal, BTC has created a bearish engulfing candlestick.
Therefore, while technical indicators are bullish, the price action is bearish, failing to provide a consensus for the direction of the trend.
There are two main possibilities for the long-term wave count, both of which indicate that BTC will bounce in the short-term.
The first one suggests that BTC Has been correcting inside a W-X-Y (red) corrective pattern since reaching an all-time high price of $69,000 on Nov 10. The sub-wave count is given in black.
In this possibility, the price will bounce in the short-term towards $45,000 – $48,000, completing the B sub-wave before another drop would complete the entire correction.
The alternate count also indicates that BTC has been correction since the all-time high price on Nov 10. However, the entire correction has taken an A-B-C structure (red), in which wave A has just been completed.
Therefore, the bounce would be more significant, potentially reaching highs near $55,000 prior to another drop.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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