Bitcoin (BTC) is approaching the support line it previously broke. Reclaiming this support line would be a very positive development, but rejecting it remains the most likely scenario.

Day outlook

The daily chart shows that Bitcoin has been on the rise since December 4th after hitting a local low of $ 42,000. On the same day, a very long lower wick was created, which is a sign of pressure to buy.

The move also caused BTC to break below the ascending support line that has existed since July 20th. This is a bearish sign suggesting that the bull run may be over.

In addition, the technical indicators are falling.

The MACD, which is made up of the short and long-term moving averages (MAs), is falling and is in negative territory. This is a sign that the short-term MA is falling faster than the long-term MA. While it will likely produce a higher momentum bar (green symbol), there is still plenty of time before today’s candle closes.

The RSI, a momentum indicator, is below 50, another sign of a downtrend.

Currently, BTC is bouncing back to the rising support line but is likely to confirm it as resistance. This line also coincides with the 0.382 fib retracement level at $ 52,350.

Given the bearish signal from the indicators, a rejection by this line seems the most likely scenario.

BTC / USDT daily chart | Source: TradingView

Descending channel

The six-hour chart shows BTC trading within a descending parallel channel. Although the price initially broke below the channel on December 4th, it has since regained the channel’s support line.

Since the majority of the problem is in the form of a wick, the channel is still valid.

Bitcoin is currently in the process of reclaiming the centerline of the channel.

The channel’s resistance line coincides with the $ 52,350 resistance area described above. Hence, a break above it is an important bullish sign.

BTC / USDT 6-hour chart | Source: TradingView

Count waves

The most likely number of long-term waves shows that BTC is still in a bull cycle.

The number of short-term waves indicates that BTC has completed wave A of the ABC correction structure. This means that it is currently in wave B and is going up.

The zone that is likely to act as the top for Wave B is at $ 58,800. This is the 0.618 fib retracement resistance and the horizontal resistance range.

However, more short-term declines are possible before BTC hits this level.

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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