Bitcoin (BTC) has fallen significantly over the past seven days but has reached near-term support that could help the price to bounce back.

Bitcoin is down 47% against ATH

Bitcoin has been falling since Feb 15 when it rejected for the second time near the $44,200 resistance area (red icon). So far, it has bottomed at $36,350 on Feb. 22.

Bitcoin is down 47% from its all-time high on Nov. 10.

BTC/USDT daily chart | Source: TradingView

Short term outlook

The six-hour chart shows Bitcoin breaking below an ascending support line. It is currently trading between the 0.618 and 0.786 Fib retracement support levels at $35,700 – $37,700. This zone is also a horizontal support zone.

There is no obvious bullish reversal signal other than the RSI moving into oversold territory.

The RSI is a momentum indicator and levels below 30 are considered oversold. The RSI was last at this low on Jan. 23, preceded by a significant upward move.

BTC/USDT 6 hour chart | Source: TradingView

The 2-hour chart is slightly more bullish, showing very pronounced bullish divergence in the oversold zone on the RSI.

If there is upward movement after that, the next resistances to watch are $39,600 and $40,575. Apart from the Fib retracement resistance levels of 0.382 and 0.5, they correspond to the support and midline of the descending parallel channel that was broken on February 18th.

BTC/USDT 2 hour chart | Source: TradingView

Count waves

There are two possible outcomes for the long-term wave count.

As for the short-term wave number, the bullish scenario shows that the downtrend is complete with the ABC trading structure. Where wave A and wave C have a ratio of 1:2, which is not uncommon in such movements.

BTC/USDT 2 hour chart | Source: TradingView

The number of partial waves is interesting because it shows a triangle containing wave 4 followed by a final diagonal. Closing crossovers is usually followed by a very strong bounce. This coincides with the possibility that BTC will retest the Fib resistance levels at $39,600 and $40,575.

BTC/USDT 30-minute chart | Source: TradingView

The number of bearish waves suggests that this decline was part of a bearish impulse. In it, BTC has just completed the third wave of a 5-wave backward pulse.

In this case, a slight bounce will follow, but it is unlikely to break above the wave 1 low at $41,575 (red line).

A rise above this line confirms that the price has started an uptrend and the short-term correction is complete.

Hourly BTC/USDT 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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