Bitcoin (BTC) is in the process of validating a short-term resistance line as support. Previously, it broke out from the line on March 16.
Bitcoin has been trading above an ascending support line since Jan. 22. It rebounded from the support on March 14 (green icon) and created a bullish engulfing candlestick. The price has been moving upwards at a more accelerated rate since, leading to a local high of $41,718 on March 16.
If the price continues to increase, there is a potential descending resistance line (dashed) at $43,000. However, the line has not been validated enough times yet, so its slope could be slightly different.
Short-term BTC breakout
The six-hour chart is a bit more bullish than the daily since it shows that BTC has broken out from a shorter-term descending resistance line.
Currently, the price seems to be in the process of decreasing and validating the line as support. If true, the $39,850 level would be the most likely to act as support, since it’s also a horizontal support level.
Conversely, the closest resistance area is found at $42,330. This is the 0.618 Fib retracement resistance level and coincides with the March 9 highs.
Wave count analysis
There are two main potential wave counts at play, both of which suggest that BTC is consolidating inside a symmetrical triangle.
The more bullish count suggests that BTC is in wave B (red) of an A-B-C corrective structure. The sub-wave count is shown in white.
After the triangle is complete, a breakout would be likely.
The bearish scenario still indicates that BTC is in trading inside a triangle pattern. However, since the triangle began on Jan. 22, the price would be likely to break to the downside after the pattern is complete.
In any case, it seems that BTC will consolidate in the near future prior to a decisive move.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here
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