Bitcoin (BTC) fell considerably on Sept 20, breaking down from the $44,000 support area in the process.
It rebounded after hitting the $40,000 support and created a long lower wick. However, the main support area still lies close to $38,000.
Ongoing BTC breakdown
BTC decreased sharply on Sept 20, creating a large bearish candlestick and falling below the $44,000 area, which previously had acted as support. Now, the area is expected to act as resistance.
Currently, BTC has found support above the 0.5 Fib retracement support level at $40,800 and created a long lower wick.
Despite the bounce, technical indicators are firmly bearish. The MACD and RSI are both falling, and the latter has already moved below the 50-line. In addition to this, the Supertrend is bearish (red line).
If another drop were to occur, the next major support level would be found at $38,000. This target is the 0.618 Fib retracement support level.
Future movement
The six-hour chart provides similar bearish readings in both the RSI and MACD.
However, it shows a potential descending channel in place with a support line near the 0.618 Fib retracement support level at $38,000.
Therefore, there is a further confluence of support levels near $38,000 that indicates BTC is likely to bounce back if it gets there.
Finally, the two-hour chart fails to show any clear bullish signs.
So, a decrease towards the 0.618 Fib retracement support level at $38,000 does seem like the most likely scenario.
Wave count
The wave count suggests that BTC in wave C of an A-B-C corrective structure (orange).
The most likely target for the bottom of the move falls between $37,930 and $38,750. The target is found by the 0.618 Fib retracement support level (white) and by giving waves A:C a 1:1 ratio.
So far, BTC has yet to reach this target.
The sub-wave count (black) indicates that the current drop and bounce were most likely as part of sub-wave three (black), and BTC is currently in sub-wave four.
Another drop toward the previously outlined target near $38,000 would complete the entire impulse.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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