After breaking down from a 32-day support area, Bitcoin (BTC) proceeded to reach a low of $41,000 on Jan 7 and is testing a horizontal support.
BTC has been moving downwards since Dec 27, 2021. The dip reached a local low of $41,000 on Jan 7, just below the 0.618 Fib retracement support level (white). This also caused BTC to sweep the December 2021 lows (red line).
After touching this support, it has retraced a bit and is currently trading at $42,200.
Potential reversal?
Technical indicators in the daily time frame are showing mixed signals.
The MACD, which is created by short and long-term moving averages (MA), has generated bullish divergence. This means that the decrease in price was not accompanied by a matching decrease in the momentum of the trend — a signal that often precedes bullish trend reversals.
However, the RSI, which is a momentum indicator, is in the process of falling below 30 (red icon). This is a bearish sign that suggests momentum is weakening.
Wave count
It appears that BTC is moving in a bearish impulse instead of a corrective formation. Due to the aforementioned sweep of the Dec 4 lows (red line), the formation is valid as a completed bearish impulse (red line).
It’s possible that wave five will extend. In this case, the main Fib support levels would be found between $36,000-$36,800. This range is the 1.61 external Fib retracement (white) of wave four and gives waves 1:5 a 1:1 ratio.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
Disclaimer
BeInCrypto strives to provide accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. You comply and understand that you should use any of this information at your own risk. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.