Bitcoin (BTC) initiated a reversal attempt on Aug 25, but failed to sustain its upward movement and has decreased considerably on Aug 26.
It’s currently in the process of breaking down from an ascending support line, an event that could initiate a sharp fall towards at least $42,400.
BTC resumes descent
BTC has been moving downwards since Aug 23 after it reached a high of $50,500. After creating a long upper wick, it created a bearish candlestick the next day, completing an evening star pattern.
The high was made very close to the $51,200 resistance area, which is the 0.618 Fib retracement resistance level and a horizontal resistance area.
The ongoing decrease was preceded by bearish divergences in the MACD and RSI. In addition to this, volume had been steadily decreasing throughout the upward movement.
While the price initially bounced on Aug 25, it reversed on Aug 26 and is in the process of creating a bearish engulfing candlestick.
The six-hour chart shows a similar bearish divergence that preceded the ongoing downward movement.
In addition to this, BTC has been following an ascending support line since the upward move began on July 20. Currently, it’s in the process of breaking down from this line.
Doing so would likely initiate a downward move toward $42,400. This target is the 0.382 Fib retracement support level and a horizontal support area.
As outlined in BeInCrypto’s most recent wave count analyses, the short-term count is not yet clear.
The first possibility is that BTC has completed wave three of a bullish impulse (orange), in which case a sharp drop would be followed by a higher high.
BTC has completed an A-B-C corrective structure (black) in the second scenario and will fall toward new lows.
Both counts predict that BTC will decrease in the short-term toward $42,400 and could likely move lower.
For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.