The Bitcoin (BTC) consolidation below resistance has been dragging on for a considerable period of time, casting some doubt on whether the short-term trend is bullish. However, the long-term trend is still decisively bullish, suggesting a new all-time high is likely in the medium term.
After bouncing considerably on Nov 3 and creating a long lower wick (green icon), BTC negated all of its gains with a bearish candlestick the next day.
Technical indicators continue to show mixed readings.
The MACD, which is created by short and long-term moving averages (MA), has created 15 successive lower histogram bars. Furthermore, it’s very close to crossing into negative territory. This would mean that the short-term MA is moving slower than the long-term one and is a bearish sign. The previous time this occurred was just before BTC reached its September lows.
However, the RSI, which is a momentum indicator, is still above 50, signaling an intact bullish trend.
The closest support levels are found at $56,530 and $53,300. These are the respective 0.382 and 0.5 Fib retracement support levels.
Future BTC movement
The two-hour chart shows that BTC is following an ascending support line since Sept 27. Each touch of this line (green icons) has been combined with a long lower wick, which is a sign of buying pressure.
However, technical indicators are similarly mixed. The RSI is right at the 50-line while the MACD is at 0 — both signs of an undetermined trend.
The main resistance area is found at $63,530. This is the 0.618 Fib retracement resistance level and a horizontal resistance area. On Nov 3, BTC seemingly broke out above it (green circle) but fell back below shortly after, rendering the breakout a deviation.
Until BTC either breaks out above this area or breaks down from the support line, the direction of the short-term trend cannot be confidently determined.
There are two possibilities for the wave count. While both suggest that a new all-time high will transpire in the medium term, the short-term movement differs between the two.
The upward movement since Oct 27 looks corrective. This is because of the considerable overlap between the short-term increases. Therefore, it’s possible that BTC is in a 1-2/1-2 wave formation. In this case, BTC could drop towards the previously outlined support at $53,300 before moving upwards.
Due to the short-term upward movement looking corrective, it’s also possible that wave one is not yet complete and BTC is still in sub-wave four (black), which has taken the shape of a triangle.
In this case, BTC would increase towards $70,000 before correcting in the short term and then resuming its upward move towards a new all-time high.
Whether BTC breaks down from the short-term ascending support line or breaks out from the $63,500 resistance area will likely determine which of the wave counts will transpire.
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