Bitcoin (BTC) staged a sharp recovery on Jan. 24 after falling to long-term support levels. Technical indicators are currently showing signs that the correction may be complete.

Ascending parallel canal

Bitcoin has been falling since hitting an all-time high on November 10, 2021. The move down eventually led to a break below the $40,800 horizontal support area, which is now believed to act as a resistance level.

The decline continued until Jan. 25 when Bitcoin hit a local low of $32,917. The price rallied shortly after (green icon) creating a bullish bar with a long wick below. This is seen as a sign of buying pressure.

Additionally, the bounce served to validate the ascending parallel channel support line that has been in place since April 2021.

BTC/USDT daily chart | Source: TradingView

Short term movement

The 2-hour chart shows the recent upward movement, which was initiated by bullish divergence in both the RSI and MACD. This is a development that usually results in a trend reversal to the upside.

After a bounce, Bitcoin hit a high of $37,550 before falling back down.

It is currently trading just above the 0.382 Fib retracement support at $35,800. The next supports are at $35,260 and $34,700. These targets are the 0.5 and 0.618 Fib retracement support levels, respectively.

One of these levels is expected to give BTC another boost.

BTC/USDT 2 hour chart | Source: TradingView

Count waves

The wave count shows that BTC has completed the ABC corrective structure that has been in development since April 2021. Waves are shown in black.

BTC/USDT daily chart | Source: TradingView

A closer look at sub-wave five shows that another bearish impulse is complete (red), further supporting this scenario.

While the number of alternative waves suggests another drop is possible, it still predicts a rally to test overhead resistances.

BTC/USDT 2 hour 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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