Bitcoin Barely Hangs on Above Channel Support

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In Brief
  • Bitcoin has completed a failure swing top.

  • Technical indicators have turned bearish.

  • The price is trading inside a parallel ascending channel.

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The Bitcoin (BTC) price has been decreasing since reaching a high of $14,100 on Oct 31.

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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.

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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.

BTC Chart By TradingView

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.

BTC Chart By TradingView

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).

BTC Chart By TradingView

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.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

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