Bitcoin Price Highlights

• The Bitcoin price has created a weekly bearish engulfing candlestick.
• The price has fallen below the 50- and 100-week moving averages.
• Bitcoin is trading inside a descending channel.
• It is likely in the fifth and final wave of a correction.

Weekly Outlook

Looking at the weekly chart, we can see that the Bitcoin price has created a bearish engulfing candlestick. It reached a close below the long lower wick of the final week of October. This is a notably bearish development since a previous support has completely dissipated. However, volume has been steadily decreasing since June and was not very significant during last weeks decrease. The bearish outlook is strengthened once we incorporate moving averages (MA) into the analysis. The Bitcoin price has just fallen below both the 50- and 100-week MAs. Previously, they were very close to making a bullish cross. However, unless the current week’s price movement causes the price to go above them, the cross is likely to be rejected. The 200-week MA is at the next minor support area at $5000-$5500.

Descending Channel

Looking at the daily chart, we can see that Bitcoin is likely trading inside a descending channel. While the Bitcoin price bounced at the support line on November 22, today it reached a slightly lower low. Since the support line is descending, it did not break down below it. Outlining a wave count which is only slightly adjusted to the one we have been using, we can see that BTC is very close to finish the fifth wave. It completed two A-B-C corrections before initiating an extended final leg consisting of five waves. The decreasing volume is consistent with this wave count.

Short-Term Bounce

Looking at the short-term, we can see that BTC has begun to create bullish divergence in the RSI. This divergence is present in the lower low relative to November 22. The current low is consistent with Fib levels for the bottom of the wave. However, if we do not see a bounce here, the next significant level is at $5500, fitting with the weekly outlook. The Bitcoin price is in the process of creating a bullish candle. A bullish engulfing candlestick with a close above $7000 would go a long way in suggesting a reversal is in place.To conclude, the Bitcoin price is at a very significant support level. If we do not see a bounce here, we could go to $5500. This could have major bearish implications and invalidate several bullish scenarios that are currently in play. For our previous analysis, click here.

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Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.

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