Bitcoin Barely Hangs on Above Channel Support

There are several bearish signals that suggest BTC could drop at an accelerated rate if it breaks down from the current parallel ascending channel.

Bitcoin Completes Failure Swing Top

In the period of Oct 27-31, BTC created a higher high, reaching a top of $14,100. During this time, the RSI generated a considerable bearish divergence inside the overbought territory. BTC has retraced since then to reach a local low of $13,220 on Nov 2. The decrease also caused the RSI to move lower and complete a swing failure top, normally considered a bearish reversal sign. In addition, the MACD has begun to decrease and has created successive smaller bars, another bearish development.

Parallel Ascending Channel

The shorter-term two-hour chart shows that BTC has been trading inside a parallel ascending channel, a movement that is likely to be corrective. Yesterday, the price bounced at the support line but was rejected by the middle of the channel and has fallen back to the support. This move has also validated a descending resistance line that has been validated multiple times. While the RSI has generated some bullish divergence, it is still below 50. Since the MACD is also steadily decreasing, a breakdown from the channel seems to be the most likely scenario.

Wave Count

In BeInCrypto’s Nov 2 BTC analysis, we stated that:

“The short-term count (blue) suggests that the price has just begun the C wave, which would complete the aforementioned wave 4 (orange).”

The wave is expected to end between $12,432-$12,562 (green circle). This is the 1.61 Fib extension of sub-wave A (blue) and the 0.382 Fib level of wave 3 (orange).

Conclusion

To conclude, the bearish reversal signals and the presence of a parallel channel make it likely that BTC is in a corrective phase. If BTC breaks down from the parallel channel, it could fall back to the $12,432-$12,562 range. 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.