Bitcoin (BTC) has potentially completed its correction with a breakout from both a medium and short-term pattern.
BTC had been stuck beneath a descending resistance line since reaching an all-time high price on Nov 10.
In the period between Dec 4-19, both the RSI and MACD generated considerable bullish divergences (green lines). This is a bullish sign that often precedes trend reversals since it means that the price decrease was not accompanied by a decrease in momentum.
After the bullish divergence was complete, BTC initiated an upward move and broke out from the descending resistance line on Dec 21.
The next closest resistance area is found between $55,500-$58,700. This target range is made up of the 0.5-0.618 Fib retracement resistance levels.
Short-term breakout
The two-hour chart shows that BTC has already broken out from a short-term descending parallel channel that’s been in place since Dec 7. This is another sign that the corrective phase is likely complete.
Currently, the closest resistance area is found at $50,600. If BTC manages to break out above this level, it will likely accelerate toward the next resistance.
BTC wave count
The short-term wave count suggests that BTC has completed a complex corrective structure (highlighted), and is now rebounding.
If waves W:Y have a 1:1 ratio, which is common in such corrections, BTC could reach a high of $55,500, aligning with the previously outlined resistance area.
In the longer term, it’s not yet certain if the ongoing upward move is part of a B wave (black), which could lead to another eventual drop or the beginning of a new impulse.
The reaction once the price gets to the top of this wave should help determine the direction of the overall trend.
Bitrue