After breaking below the 32-day support area, Bitcoin (BTC) continued to decline, hitting a low of $ 41,000 on Jan. 7. It is currently testing an important horizontal support area.

Bitcoin has been falling since December 27, 2021. The decline hit a local low of $ 41,000 on Jan 7, just below 0.618 fib retracement support (white). This also caused BTC to hit a low in December 2021 (red line).

After touching this support, it rebounded somewhat and is currently trading at $ 42,200.

Bitcoin / USDT daily chart | Source: TradingView

Possible reversal?

Technical indicators on the daily timeframe give mixed signals.

The MACD, formed from the short and long-term moving averages (MAs), has created a bullish divergence. This means that the decline was not accompanied by a decrease in momentum – a signal that often heralds an upward trend reversal.

However, the RSI, a momentum indicator, is about to drop below 30 (red symbol). This is a bearish sign that the momentum is weakening.

BTC / USDT daily chart | Source: TradingView

Count waves

It looks like BTC is moving in a bearish impulse rather than a correction. This was due to the break of the aforementioned December 4th low (red line).

Wave five will likely last. In this case, the top Fib support levels are between $ 36,000 and $ 36,800. This area is the 1.61 (white) outer fib retracement level of wave four and gives the 1: 5 waves a 1: 1 ratio.

BTC / USDT daily chart | Source: TradingView

You can see the BTC 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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