Bitcoin reached a high of $45,821 on February 10 before dropping. At $44,900, the high was set directly at the 0.618 Fib retracement resistance level.
The subsequent drop produced a shooting star candlestick pattern. This is typically regarded as a bearish pattern since selling pressure resulted in a long upper wick and a negative closing. The fact that it occurred in an important resistance region adds to its significance.
Bitcoin has broken out of an ascending parallel channel that has been in place since January 24 on the six-hour chart. Following that, on February 9 and 10, the price validated the level as support twice more (green icons). The next day, though, it broke down inside the channel once more (red icon).
Although technical indicators are indicating a negative trend reversal, they do not confirm it. The MACD, which is calculated using short and long-term moving averages (MA), is dropping but remains positive.
The RSI, a momentum indicator, is also declining. It is, however, still above both the 50-day moving average and an upward trendline that has been in place since January 24.
The current bullish trend will continue until this level is violated. The two-hour chart also reveals significant weakening. This is particularly evident in the bearish divergences that have formed in the RSI and MACD. This weakness came before the current downward trend.
Currently, it appears like BTC is in the process of verifying the channel’s resistance line once more. The major support area costs $41,000. This is the 0.5 Fib retracement support level and the rising parallel channel’s midline.
According to the most likely long-term wave count, Bitcoin has already reached a bottom. On terms of the short-term count, BTC appears to be in wave four of a five-wave rising trend (red). The sub-wave count is indicated in black.
The rise in Fed 10 and subsequent decline indicates that the wave took the form of a flat corrective. So far, sub-waves A and C have had a perfect 1:1 ratio, as is typical in such systems.
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