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Bitcoin Breaks Out but Bullish Trend Still Unconfirmed

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Written by
Valdrin Tahiri

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Edited by
Kyle Baird

03 February 2021 07:39 UTC
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  • Bitcoin has broken out from a descending resistance line.
  • Daily indicators are still bearish but short-term signals are bullish.
  • BTC is in the C wave of an A-B-C corrective structure.
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Bitcoin (BTC) broke out from a descending resistance line that had been in place since the Jan. 8 all-time high price.

Despite this, neither technical indicators nor the wave count confirms a bullish Bitcoin trend. Rather, they suggest that another decrease is in store.

 

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Bitcoin Breaks Out

Bitcoin was rejected multiple times by the descending resistance line but finally managed to successfully break out on Feb. 2, reaching a close significantly above it. With this movement, BTC also moved above the $34,000 resistance area.

However, technical indicators have yet to confirm the bullish movement, and BTC is trading very close to the 0.618 Fib retracement resistance at $37,000. Therefore, it’s not yet confirmed that BTC is in a bullish trend.

BTC Resistance Breakout
BTC Chart By TradingView

The two-hour chart provides a similar outlook.

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While technical indicators have turned bullish, BTC is trading inside a resistance area that is ripe for a reversal and often acts as the top for corrective movements.

The resistance area is found between $36,100-$37,200 (0.618-0.786 Fib retracement levels).

BTC Short-Term Movement
BTC Chart By TradingView

BTC Wave Count

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The wave count indicates that BTC is in the C wave of an A-B-C corrective structure (shown in white below) which could take it to a low of $25,700.

An increase above the Jan. 29 high of $38,620 (red line) would invalidate this particular wave count.

The sub-wave count is shown in orange and suggests that BTC is nearing the top of sub-wave 2.

BTC Count
BTC Chart By TradingView
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A closer look at the second sub-wave confirms this possibility, giving a possible target of $37,257 for the top of the move. This target also coincides with the 0.786 Fib retracement resistance from the previous section.

BTC Tiny count
BTC Chart By TradingView
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Conclusion

Despite yesterday’s breakout, it’s not confirmed that the BTC trend is bullish. On the contrary, it’s still likely that BTC makes a move higher to $37,200 before breaking down.

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here

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