Bitcoin (BTC) has almost hit the resistance line of the short-term pattern. Its breakout or rejection is likely to determine the direction of the short-term trend.

Descending parallel channel

Bitcoin has fallen into a descending parallel channel since December 27th. This resulted in a low of $ 39,650 on Jan. 10. BTC rebounded after hitting the channel’s support line and has been higher since then.

This move helped Bitcoin recapture the December 4th low (red line) where it appears to have been breached.

Right now the price is very close to the resistance line of the channel. A breakout above this can see BTC spike towards $ 45,900, the 0.5 fib retracement level, and the horizontal resistance area.

Bitcoin/ USDT 6-hour chart | Source: TradingView

Potential breakthrough

Technical indicators support a breakout as the MACD and RSI are both rising.

The MACD is made up of short-term and long-term moving averages (MAs) and is about to transition into the positive zone. This means that the short-term MA is moving faster than the long-term MA and is usually a sign of an uptrend.

The RSI has moved above 30 and is about to cross above 50, which is often viewed as a benchmark for trend detection.

BTC / USDT 6-hour chart | Source: TradingView

Count waves

While the number of long-term waves has yet to be determined, the short-term number shows that Bitcoin has completed a bearish move with five waves (black).

However, the fifth wave is relatively short. It missed the target range of $ 36,100 to $ 36,500, represented by a 1: 1 ratio of waves one and five (black) and the external fib retracement level of 1.61 of wave four (white).

The number of partial waves is displayed in red.

BTC / USDT 4-hour chart | Source: TradingView

A closer look reveals that partial waves five are also relatively small compared to partial waves one and three. The length of this partial wave is less than the length of 0.618 of partial wave 1. It is therefore possible that BTC is still in the fourth partial wave and BTC will accept a further decline in the direction of the goal outlined above.

In the event that the move continues, giving partial waves 1 and 5 a 1: 1 ratio, BTC can hit a low of $ 36,900. Close to the long-term goal.

Whether BTC breaks above the channel’s resistance line or is rejected will potentially determine what wavenumber will occur.

In any case, it looks like BTC is already very close to the bottom.

BTC / USDT 2-hour chart | Source: TradingView

You can see the BTC price here.

Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews

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.

Follow the Youtube Channel | Subscribe to telegram channel | Follow Facebook page