The Bitcoin (BTC) price has been retracing since getting rejected by the $12,000 level on Aug 2 and Aug 10.It is not yet clear if the current movement is corrective or an impulse that will bring new local highs.
Bitcoin Retraces After Double-TopThe Bitcoin price reached a top of $12,067 on Aug 10 and immediately fell. The decrease was preceded by bearish divergence in the 12-hour RSI (in red below). After the drop, the RSI generated a hidden bullish divergence and was able to propel BTC back to the $11,700-$11,800 region. Furthermore, the MACD has given a reversal signal in the 12-hour time-frame, even though it is still bearish on the daily chart. Volume has been higher during bearish candlesticks than during their bullish counterparts. These conflicting technical indicators show that the direction of the trend is not definitively clear.
Correction Or Upward Move?While the price is following an ascending support line, the slope of the resistance line is not yet clear, so this could play out to be an ascending triangle or wedge. An interesting observation since the massive drop on Aug 2 is the presence of overlap in almost every new high. This is a sign that the upward movement is not an impulsive move but rather a correction, meaning the direction of the trend is to the downside. However, since the wave count is not clear, this is likely to be a complex corrective pattern rather than a simple A-B-C correction.
Short-Term ResistanceThe appearance of numerous wicks also makes it tough to determine the slope of the ascending support. It is possible that the price has already broken down and is now in the process of validating the line as resistance. Furthermore, the price is between the 0.618-0.718 Fib levels of the previous decrease, making it a likely level for a reversal. The closest resistance level is found near $11,800 while the closest support at $11,450. To conclude, while it is possible that the current upward movement is a correction, its structure is not yet clear, so we cannot confidently determine the direction of the next move. For our previous analysis, click here.
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