Bitcoin (BTC) Bounces Back but Fails to Crack Resistance

Bitcoin (BTC) bounced to the upside on May 20, temporarily halting the historic correction of the previous day.

Despite the recovery, it has yet to clear a crucial horizontal resistance level or break out from a descending resistance line. Therefore, it has not yet confirmed a bullish reversal.

BTC bounces above support

BTC increased on May 20 after finding support the previous day. However, it was rejected by the 0.382 Fib retracement resistance at $41,200. This is only a minor resistance level. The most critical resistance for BTC to overcome is $48,170. 

Despite the rejection, technical indicators have created the first bullish sign in the daily time frame. The RSI has moved above the 30-line, crawling out from oversold territory. However, both the MACD and Stochastic oscillator are still bearish. 

The primary support area is found at $30,000, a level which was reached on May 19.

Future BTC movement

The six-hour chart shows several more bullish signs.

Firstly, the candlestick patterns are bullish. There is a bullish engulfing candlestick (highlighted) that followed a bullish hammer (green icon). Furthermore, the MACD has given a bullish reversal sign. 

However, BTC has yet to break out above the descending resistance line that’s been in place since May 11. The line also coincides with the previously outlined $41,200 resistance area.

Until it reclaims these levels, the short-term trend cannot be considered bullish.

Wave count

The short-term wave count is not entirely clear since the move from the lows consists of three waves instead of five.

So, it’s either following a leading diagonal (black) or a complex corrective structure (white). Currently, it cannot be determined which is more likely.

In any case, the main support levels are found at $38,000 and $35,000.

If the move is a leading diagonal, BTC could bounce at the $38,000 level. If it’s a complex correction, BTC could potentially fall all the way to $35,000 before any further upwards movement.

For the longer-term count, click here.

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