Bitcoin (BTC) continued its ongoing descent yesterday, falling all the way to a low of $31,163.
However, it has reached a short-term support level which could initiate a short-term bounce. Following this, another decrease could eventually occur.
Continued BTC descent
BTC has been decreasing since June 15, when it was rejected by the $41,150 resistance area.
Yesterday, it created a significant bearish candlestick and fell all the way to a low of $31,163. This potentially validated an ascending support line for the third time.
BTC has to bounce at this level in order to confirm the validity of the line.
Despite the potential bounce, technical indicators are bearish. The MACD histogram is nearly negative while the signal line is below 0. The RSI & Stochastic oscillator are both decreasing, the former being below 50.
However, there is some bullish divergence in place, which could cause a short-term bounce. Regardless, it does seem that the longer-term trend is bearish.
The two-hour BTC chart appears a bit more bullish.
The RSI has generated numerous bullish divergences and the MACD is moving upwards.
Along with a rebound at the ascending support line, this indicates that a short-term upward move towards the descending resistance line (dashed) near $34,000 is likely.
BTC wave count
The wave count indicates that the decrease is the first wave (black) of a longer-term bearish impulse.
In this case, BTC is now correcting from the preceding decrease.
The three closest resistance levels would likely be found at $35,050, $36,250, and $37,450. These targets are the 0.382, 0.5, and 0.618 Fib retracement resistance levels.
The $36,250 area is also horizontal resistance.
The ongoing BTC bounce seems impulsive since it’s clearly forming a five-wave structure.
As a result, it’s very likely that this is the beginning of a corrective wave two.