Bitcoin (BTC) hit a low of $41,000 on January 7th after breaking above the 32-day support area and is testing a horizontal support.
BTC has been trending downward since December 27, 2021. There was a local low of $41,000 on January 7th, which was just below the 0.618 Fibonacci retracement support level (White). This caused BTC to cross the December 2021 low (red line).
After touching this support, it retreated slightly and is currently trading at $42,200.
Possible reverse?
Technical indicators are showing mixed signals on the daily time frame.
The MACD, which is formed by the short and long term moving averages (MA), has generated a bullish divergence. This means that the price reduction was not accompanied by a matching decrease in trend momentum – a signal that often precedes a bullish trend reversal.
However, the RSI, which is a momentum indicator, is in the process of falling below 30 (red sign). This is a bearish signal indicating that momentum is weakening.
wave count
It looks like BTC is moving in a bearish impulse rather than a corrective formation. Due to the aforementioned sweep of the December 4 lows (red line), the formation is valid as an outright bearish impulse (red line).
It is possible that wave five will extend. In this case, the main Fibonacci support level will be found between $36,000-$36,800. This range is wave four’s 1.61 external fib retracement (white) and gives the waves a 1:5 to 1:1 ratio.
For previous bitcoin (BTC) analysis from BeInCrypto, click here,