Bitcoin (BTC) headed for $27,000. Is the light visible at the end of the tunnel?
Date: 2023-06-20 Author: Karina Ziganova Categories: IN WORLD
The price of bitcoin (BTC) jumped sharply after reaching a local bottom on June 15. It is close to a bullish breakout from a nearly three-month pattern
Despite this upward movement, wave analysis shows that the BTC rate may decline even more. Thus, after the completion of the relief rally, bitcoin can trigger another sharp drop.
Bitcoin: a rebound, but not yet a victory
Technical analysis on the daily timeframe shows that the price of bitcoin has been falling inside the downward parallel channel since the beginning of April. Such channels are considered corrective patterns. As a result, the most likely scenario for further price movement is a bullish breakout from this channel.
On June 15, BTC bounced (green icon) from the area of convergence of support levels at $25,000. It is formed by the Fibonacci level of 0.382 retracement and the horizontal support area. This merger makes this area critical. After the rebound, the price moved up to the resistance line of the channel.
Meanwhile, the momentum RSI indicator has been hovering above and below the 50 mark (highlighted in the chart) since April 20. This is considered a sign of trend indecision.
Recall that values above 50 and the uptrend of the indicator indicate that the bulls retain an advantage, while values below 50 indicate the opposite. Although the RSI is below 50, it is rising, which is a sign of a neutral trend.
BTC in light of wave analysis
Meanwhile, the results of the wave analysis indicate the likelihood of a further price decline. Although there are still two possible scenarios in the game, both suggest that the price has not yet reached the low.
Since the end of May, the price of BTC has been correcting in the correction structure W-X-Y (black). If this analysis is correct, then the price is now in wave Y, which is the final one before the bullish reversal.
There are three confluence levels around $23,300 that make this level likely to complete the correction.
First, the $23,300 area coincides with the Fibo support level of the 0.5 retracement (white). The principle behind the Fibonacci retracement suggests that after a significant price movement in one direction, it can partially retreat and return to the previous price level before continuing to move in the original direction. Further, a low near $23,300 will give W:Y waves an exact 1:1 ratio. And finally, this area coincides with the channel support line.
Due to the convergence of these levels, this area is expected to act as a bottom for BTC.
An alternative scenario assumes that the price of BTC has completed the formation of a leading diagonal pattern from the April highs. Although the pattern is complete, the diagonal is part of a larger structure, either corrective wave A or bearish wave 1.
As a consequence, such a scenario could lead to shorter-term growth. However, once the rebound is complete, a new sharp drop is expected, as a result of which bitcoin will fall to at least the support area of $23,300, and possibly to $21,000.
As a consequence, such a scenario could lead to shorter-term growth. However, once the rebound is complete, a new sharp drop is expected, as a result of which bitcoin will fall to at least the support area of $23,300, and possibly to $21,000.
Despite this bearish BTC short-term outlook, a break above the annual high of $31,000 (red line) would mean that the trend is bullish. In this case, the most likely scenario will be a price strengthening to $40,000.
