Bitcoin (BTC) declined after reaching a high above $48,000 on February 10 and appears to be in the process of completing a corrective structure.
On February 10, bitcoin reached a high of $45,821 before falling. A high was formed at $44,900 near the 0.618 Fib retracement resistance level.
The ensuing decrease created a Shooting Star candlestick pattern. This is generally considered to be a bearish pattern, as selling pressure managed to create a long upper wick and a bearish close.
The fact that it circulated in a significant resistance zone further accentuates its importance.
short term movement
The six-hour chart shows that BTC has broken out of an ascending parallel channel it previously held since Jan. 24. Price confirmed the level as support twice after February 9 and 10 (green icon). However, it broke inside the channel once again the next day (red sign).
Technical indicators are showing some bearish signs but do not confirm a bearish trend reversal.
The MACD, formed by the short and long term moving averages (MA), is declining but is still positive.
The RSI, which is a momentum indicator, is also declining. However it is still above both the 50-line and an ascending trendline which is also in force since Jan 24.
As long as this level is not broken, the bullish trend continues.
The two-hour chart also shows a lot of weakness. This is especially visible in the developing bearish divergence in the RSI and MACD. This weakness was preceded by the ongoing decline.
Currently, it looks like BTC is in the process of verifying the resistance line of the channel once again.
The main support area is found at $41,000. The target is the 0.5 Fibonacci retracement support level and the midline of the ascending parallel channel.
BTC wave count analysis
The most likely long-term wave count indicates that BTC has already reached a bottom.
For short-term calculations, it looks like BTC is in wave four of a five-wave uptrend (red). Sub-wave counts are shown in black.
The Fed 10 rise and subsequent decline suggest that the wave has taken the form of a flat correction.
Until now, the sub-waves A and C have had a precise 1:1 ratio, which is the most common of such structures.
The next most common ratio is 1:1.61. It will move towards the $41,335 low, which will also tag the midline of the channel and the 0.5 Fibonacci retracement support level above.
For previous bitcoin (BTC) analysis from BeInCrypto, click here