Yesterday, Bitcoin was able to build incredible momentum and rose to $40,000.
However, there BTC was harshly rejected and as a result fell back below the critical area at $40K. What awaits the Coin now?
Bitcoin fails at critical level
Bitcoin (BTC) peaked at $40,112 on January 14, but was rejected immediately after and has been declining ever since.
While the long-term trend so far is likely trending bearish, the short-term trend remains bullish as long as Immediate Bitcoin trades above $36,717.
Hidden divergence causes bitcoin pump
BTC has been moving higher since it hit a local low of $30,402 on Jan. 11. It formed a long lower wick just above the 0.382 Fib retracement level of the recent uptrend.
BTC rose as high as $40,112 on January 14 before being rejected.
Technical indicators on the daily time frame are bearish. While the RSI has generated a significant hidden bullish divergence, a price rise has already occurred as a result.
The MACD is moving down and the Stochastic Oscillator has formed a bearish cross. Both are strong signals that the trend is bearish.
The six-hour chart shows that BTC has been rejected at a certain level (0.786 Fib retracement level), which previously acted as support. Therefore, the $39,463 area is now confirmed as resistance.
Despite the rejection, technical indicators are still bullish and there is an ascending support line currently at $34,000. This means that it is possible that the short-term trend is still bullish.
The two-hour chart shows that BTC is following another, shorter-term ascending support line. This line is currently just below the $37,143 support area (which represents the 0.382 Fib retracement of the recent uptrend).
As long as BTC trades above this support area/line, the short-term trend is still considered bullish.
BTC wave count
The so-called wave count shows that BTC may have completed a correction. Yesterday, BTC was rejected by the resistance line of a parallel ascending channel, suggesting that it is a corrective move.
While the A-B-C correction appears to be complete, it is still possible that wave 5 will extend.
So, as long as BTC does not fall below the low of sub-wave 4 at $36,717 (represented by the red line), it is possible that the upward movement will continue. It could potentially reach a high of 42,603, which would give waves A:C a ratio of 1:1.61.
While it is possible that the BTC trend is in wave 4, that does not fit the longer-term count. Also, the invalidation level would be the same. Therefore, it does not seem worthwhile to follow this count until further notice.
While Bitcoin (Go to Buy Bitcoin Cheap Guide) seems to be nearing the top of its corrective move, the short-term trend is considered bullish as long as BTC trades above $36,717.