Bitcoin (BTC) was rejected from the $44,200 resistance area on Jan 13 and is currently attempting to find support.

Parallel channel breakout and retest

On Jan. 12, Bitcoin broke out above a descending parallel channel previously in place since Dec. 27. This is a sign that the correction is over.

It continued to climb until it hit a high of $44,500 on January 13th. The high was set right at the 0.382 Fib retracement resistance as the previous bearish move was measured.

Despite a stronger resistance at $45,800, Bitcoin failed to reach it.

After the rejection, Bitcoin declined and has now returned to the $42,100 region that previously acted as resistance. This zone should now act as a support.

BTC/USDT 6 hour chart | Source: TradingView

future movement

The two-hour chart shows Bitcoin trading between the 0.382 – 0.5 Fib retracement support levels at $42,100 – $42,650. This is a strong support area and could trigger a bounce.

There is lower support at $41,500, 0.618 Fib retracement support, also horizontal support area.

BTC/USDT 2 hour chart | Source: TradingView

However, the daily chart is offering mixed signals. While the MACD has been generating successively higher momentum bars, a potential bullish reversal signal, Bitcoin has generated a bearish engulfing candle.

Therefore, while the technical indicators are bullish, the price action is bearish and fails to create consensus on the direction of the trend.

BTC/USDT daily chart | Source: TradingView

Count waves

There are two main possibilities for the long-term wave count, both of which suggest that BTC will rally in the near-term.

The first suggests that BTC has been correcting within a WXY corrective pattern (red) since hitting an all-time high of $69,000 on Nov. 10. The number of subwaves is drawn in black.

On this possibility, the price will rally in the short term and head towards $45,000-$48,000, completing sub-wave B before another decline completes the entire correction.

BTC/USDT daily chart | Source: TradingView

The number of substitutions also shows that BTC has corrected since its all-time high on Nov. 10. However, the entire correction has taken place after an ABC structure (red) where wave A has just completed.

As a result, the upside potential will be more significant, potentially reaching highs near $55,000 before another drop.

BTC/USDT daily chart | Source: TradingView

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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