Bitcoin Continues Bleeding After Failed Breakout

Unless the level is reclaimed, the price movement is considered bearish.

Bitcoin Trading Range

On Aug 17, the Bitcoin price broke out from the $11,950 area, which had been acting as resistance since the Aug 2 high. However, higher prices could not be sustained. BTC has been decreasing since, falling back below the $11,950 level, which is now expected to act as resistance. The closest support area is found near $11,150, coinciding with the 50-day moving average (MA). Technical indicators are bearish. There is a bearish divergence in the RSI, and the short-term MACD has crossed into negative territory. The long-term MACD shows a decrease in momentum as well and has given a bearish reversal signal. Volume has also been increasing during the drop, another bearish sign.

The shorter-term chart reveals that the price has been following an ascending support line since Aug 2, and is currently sitting on the line. There is a small bullish divergence in both the RSI and the MACD, suggesting that a bounce is likely. Until the price is able to reclaim the previous breakout level at $11,950, the price movement is considered bearish.

Bearish Wave Count

In yesterday’s analysis, we stated that the price is likely in a C corrective wave, which is expected to end in the ranges of $10,954-$10,850 or $9,659-$9,732. We can further outline the decrease by mapping a possible five-wave count (orange) for wave C. It seems that the price is in the first wave, which is transpiring in five sub-waves (green). BTC is currently in sub-wave 4. which could end near the 0.5 Fib level of the entire decrease at $12,000. Due to the length of time for the downward move, the upwards reversal is expected to end today in the afternoon. We can further outline an A-B-C corrective formation (purple) inside wave 4. A similar target near $12,000 is given by the 1.27 external Fib retracement of sub-wave B, and the 1.61 Fib of sub-wave A, making this a likely level for the reversal to end before the price resumes its downward movement. To conclude, the Bitcoin price has likely begun a corrective movement since it failed to sustain higher prices after a breakout. For our previous Bitcoin analysis, click here!