See More

Bitcoin (BTC) Creates Bullish Engulfing Candlestick, Breaks Out From Consolidation Pattern

2 mins
Updated by Kyle Baird
Join our Trading Community on Telegram

In Brief

  • Bitcoin created a bullish engulfing candlestick on May 4.
  • It broke out from a descending wedge pattern.
  • BTC has completed an A-B-C corrective structure.
  • promo

Bitcoin (BTC) increased by more than 5% on May 4 and broke out from a descending wedge that had been in place since April 18.

Bitcoin has been gradually decreasing after being rejected at $43,000 on April 21 and reached a local low of $37,386 on May 1. 

Throughout the entire downward movement, the RSI has generated a considerable bullish divergence (green line). 

On May 5, BTC increased considerably and created a bullish engulfing candlestick, briefly moving above $40,000. The rebound took place after the bullish divergence played out and served to validate the $37,800 horizontal support area. 

The closest resistance area is found between $41,600 and $42,850. This target range is the 0.382-0.5 Fib retracement resistance levels when measuring the entire drop since March 28.

BTC breaks out from wedge pattern

The six-hour time frame shows that BTC had been decreasing inside a descending wedge since April 18. The descending wedge is often considered to be a bullish pattern, meaning that it leads to a breakout the majority of the time. 

Similar to the daily time frame, the RSI generated a bullish divergence prior to the May 4 breakout. Before this, BTC had been trading inside the wedge for nearly 17 days. Alongside the positive price action, the RSI also broke out from its descending trend line.

The previously outlined top of the resistance range at $42,800 is also a horizontal resistance area, increasing its validity.

Wave count analysis

The wave count suggests that BTC has completed an A-B-C corrective structure (red). In it, waves A and C had a 1:1 ratio. The sub-wave count is shown in yellow in the chart below and suggests that sub-wave five developed into an ending diagonal, hence the wave shape. 

If true, a rapid upward move that clears the highs of the wedge would be likely.

If the long-term wave count plays out, BTC could increase to $50,350. This would give the longer-term waves A and C a 1:1 ratio.

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

Top crypto projects in the US | June 2024



In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)