Bitcoin Decisively Breaks Out Above Resistance

While a short-term decrease could occur in order to validate the area as support, it does not look like BTC has reached a top yet.

Bitcoin Breaks Out

The Bitcoin price had been trading below the $15.800 resistance area since Nov 5. After creating an ascending triangle, the price was finally able to break out yesterday, reaching a high of $16,494 before decreasing slightly. The $15,800 area is now likely to act as support, and also coincides with an ascending support line.

In the short-term, BTC has begun to show weakness. After creating two bearish engulfing candlesticks, the price has created an evening star pattern, which is normally considered a bearish reversal pattern. Therefore, it is possible that the price will retrace to validate the $15,800 area as support, along with the ascending support line, before eventually moving higher.

Long-Term Resistance

Despite the breakout, the daily trend has begun to show weakness in the form of the considerable bearish divergence in the RSI, which is also in overbought territory. However, neither the MACD nor the Stochastic Oscillator is showing any weakness.

Furthermore, the price has reached the 0.786 Fib resistance level at $16,140 when measuring from the 2017 all-time high price. When combining this with the bearish divergence, it shows that BTC is likely nearing the top of its upward move. If the increase continues, the next resistance level is found at $17,264.

Wave Count

The BTC price is likely in the fifth sub-wave (blue) of the fifth wave, which has a target between $16,900-$17,200. In BeInCrypto’s previous Bitcoin analysis, it was stated that:

“This particular target was found by projecting the length of sub-waves 1-3 to sub-wave 4 (blue & orange). This is also the 4.618 Fib extension of sub-wave 1 (blue).”

The minor sub-wave formation (black) for the possible final increase is given below, and aligns with the rest of the analysis, suggesting a short-term drop before one final upward movement.

Conclusion

While it is possible that BTC decreases in the short-term to validate the breakout level, it appears that the upward move has not yet reached its conclusion. For BeInCrypto’s previous Bitcoin analysis, click here! Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto