While Bitcoin (BTC) hit a new all-time high of $ 67,000 in the week of October 18-22, it fell slightly over the weekend. The week’s closing price was about $ 800 below the opening price.
In the weekly timeframe, there are mixed signals between technical indicators and price action. Most technical indicators are bullish, but price action still looks bearish.
BTC remains below the ascending support line formed since the uptrend began in March 2020. Failure for that line to recover is a bearish sign, suggesting that it is now likely to act as a resistance.
Despite this move, the technical indicators are still bullish.
The MACD, formed by the short and long-term moving averages, is in positive territory and rising. This means that the short term trend is moving faster than the long term trend.
Additionally, the RSI is above 50 and rising. This is also a sign of an uptrend as an RSI above 50 is considered an uptrend.
Finally, the super trend line is bullish (green circle). Supertrend is an indicator that uses volatility to determine the direction of the trend. Since the BTC price is above this line, the trend is considered bullish.
Weekly BTC / USDT Chart | Source: TradingView
A closer look shows that a potential double top is forming. The double top is often viewed as a bearish pattern, which means that a bearish trend reversal is possible.
In addition, the second upper part has a long wick at the top and resembles a shooting star candle (red symbol). This is also a bearish candlestick pattern showing that sellers at higher levels are in control.
The validity of the pattern depends on where the weekly closing price is. If it closes above the absolute high (straight line), the current decline is just another test of the uptrend. When closing below the support (gray), the double point is confirmed.
As a result, the weekly chart shows an uncertain outlook for price development.
Weekly BTC / USDT Chart | Source: TradingView
The assistance levels are shown more clearly in the daily timeframe.
The first zone is at $ 56,550. This is the 0.382 Fib retracement support that measures the most recent part of the upside move (highlighted).
If this zone breaks, a second support zone will be found between $ 52,300 and $ 53,300. That range is the 0.5 Fib retracement level, which measures the same portion of the upward move, and the 0.382 Fibonacci retracement level, which measures all of the upward move since June 22nd prior support and resistance.
BTC / USDT daily chart | Source: TradingView
There are two possible wavenumbers in the current scenario. The first indicates that BTC is on the third wave of an upward pulse, while the second indicates that BTC is on the second wave. A bullish impulse is created by five waves, three of which are an upward move (1-3-5).
The first scenario is more bullish as it shows that BTC is forming a 1-2 / 1-2 wave. This is a pattern where the uptrend will accelerate if the movement continues. Currently, BTC is in wave three (white). The number of partial waves is displayed in orange and identifies BTC in the second partial wave. This can cause it to drop to the $ 52,300 to $ 53,300 support area described above.
BTC / USDT daily chart | Source: TradingView
The second scenario is a bit more bearish and shows that BTC is still in the second wave (white) of the same bullish pulse.
In this case, a bigger correction is expected, falling to $ 47,700 or $ 43,100 is likely. These are the 0.5 and 0.618 fib retracement support levels and the horizontal support area.
BTC / USDT daily chart | Source: TradingView
You can see the Bitcoin price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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