Bitcoin (BTC) has potentially reached a bottom and would confirm it with a breakout above its short-term resistance.
BTC decreased considerably during the week of Nov 22-28, leading to a low of $53,256 on Nov 28. However, a bounce began the same day and BTC closed the week just above $57,000. This led to the creation of a long lower wick, which is considered a sign of buying pressure.
Despite the bounce, there are still considerable weaknesses developing in the weekly time frame.
Firstly, BTC has fallen below the $59,000 horizontal area. The area previously acted as the all-time high resistance between April-May and was expected to act as support.
Secondly, both the RSI and MACD have generated bearish divergences (green lines). This is a bearish development that often leads to trend reversals. The fact that it’s transpiring in a long-term time frame like the weekly is especially worrisome. However, the divergence is not very pronounced in the RSI, somewhat reducing its significance.
Daily BTC movement
The daily chart provides a more bullish outlook.
BTC has created a bullish candlestick after bouncing at the $53,250 support area. This is a horizontal support area and the 0.5 Fib retracement support level.
Furthermore, technical indicators are showing signs of a reversal.
The MACD, which is created by short and long-term moving averages (MA), is in the process of creating successive higher momentum bars. This is a sign that the short-term trend is picking steam relative to the long-term average.
The RSI, which is a momentum indicator, is also close to moving above 50. The 50-line is often considered the threshold for a bullish/bearish trend.
The six-hour chart shows that BTC is following a descending resistance line since reaching an all-time high price on Nov 10.
The line coincides with the $59,350 resistance area, which is the 0.382 Fib retracement resistance level.
A breakout above this line would cause the previously outlined indicators to confirm the reversal. Therefore, it would confirm that the correction is complete.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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