Bitcoin (BTC) is moving in a sharp upward rally on the path to a new all-time high price. While a short-term drop could occur, BTC is expected to gradually move toward a new high.
Bitcoin increased considerably on Oct 6, creating a large bullish candlestick with a magnitude of more than $5,000. This took it above the September highs of $52,920 and on to a local high of $55,750. BTC is now approaching the $57,200 resistance area.
Technical indicators are bullish as both the RSI and MACD are provide bullish readings.
The RSI is increasing after moving above 50 (green circle) on Oct 1. The previous time it did this was on July 21, leading to a 47-day upward move. The current increase also coincided with a retest of the $47,800 area (green icon), which is now expected to act as support.
The MACD, which is created by short and long-term moving averages (MA) is also increasing and is in positive territory. This means that the short-term MA is above the long-term MA. Furthermore, its positive histogram means that the short-term MA is moving quicker than the long-term average.
Therefore, the daily time frame for BTC provides a firmly bullish outlook.
Future movement
The two-hour chart also gives a bullish outlook. BTC has broken out from a parallel ascending channel and validated it as support after (green icon).
Since channels usually contain corrective movements, this is a sign that the movement is not corrective.
Rather, it appears to be an impulsive upward move, meaning that the increase is part of a bullish trend rather than just a bounce.
Bitcoin wave count
Because the breakout from the channel indicates that the current move is impulsive, the wave count suggests that the current increase is part of wave three (black). Wave three is the most likely to extend, hence the rapid upward move. So far, wave three has been 2.61 times as long as wave one.
It’s possible that a sharp drop will soon follow as part of wave four, completing a fourth wave pullback. This is an Elliott wave occurrence where a sharp drop follows a sharp increase, before the continuation of the upward movement.
If one occurs, the $48,000 area would be very likely to initiate a bounce.
This level is:
- A horizontal support area
- The resistance line of the channel
- Wave four of a smaller degree
Therefore, if BTC gets to this support level, it’s likely to end the drop.
The long-term wave count is also bullish, suggesting that BTC will move toward a new all-time high.
The most likely possibility is that BTC is in a 1-2/1-2 wave formation. This means that it is currently in the first part (orange) of an increase that will eventually get even sharper, leading it to a new all-time high price in the process.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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