What can prevent bitcoin (BTC) from groping for the bottom
Date: 2023-07-28 Author: Karina Ziganova Categories: BLOCKCHAIN
The price of bitcoin (BTC) has been declining since July 13. On July 21, it accelerated its fall, making a breakthrough of an important horizontal area
Although the price dynamics and RSI signals are bearish, wave analysis suggests that BTC may reach the bottom in the near future. However, in order for this opportunity to persist, a decisive price rebound is needed.
Bitcoin rolled back from resistance
As the results of the technical analysis of the daily chart show, the picture for bitcoin looks bearish. On July 13, the price of BTC reached a new annual high of $31,800, but then declined rapidly. The next day, a bearish engulfing candle (red icon) was formed, which is characterized by a large bearish candle completely absorbing the previous day's bullish candle. This pattern often leads to a subsequent price decline.
After the appearance of this bearish candlestick pattern, BTC hovered above the horizontal area of $30,000. However, on July 23, he made a decisive breakthrough in this zone. Thus, the entire previous bullish breakout is seen as a price deviation, often followed by a sharp decline.
The daily Relative Strength Index (RSI) shows a decidedly bearish sentiment. This momentum indicator is currently declining and is below the 50 mark which is a sign of a bearish trend.
In addition, with a decline, the RSI confirmed a triple bearish divergence, which has been developing since June 23 (represented on the chart by a green line). Bearish divergence occurs when the price rises, but the momentum indicator decreases, indicating the fading of the strength of the bullish momentum. Such a pattern often precedes a bearish trend reversal.
BTC Prediction: The Bottom Is Near
Meanwhile, wave analysis of the shorter 6-hour timeframe suggests that the price is now correcting, but the bottom is near. According to its results, BTC has been forming a five-wave bullish structure (white) since June 14. If this is true, then the price will start a correction, probably following the A-B-C pattern (black). Currently, BTC price is trading just above the Fibo support level of the 0.382 retracement (white).
Fibonacci levels are traditionally considered the most likely springboards for stopping and reversing the price after significant progress in any one direction. They can determine the limit levels of the market. Thus, the price has already reached a level at which the correction could potentially end.
Moreover, the A:C wave ratio is exactly 1:1.61. Thanks to this confluence of support levels, it is possible that the correction has already been completed. If this is the case, then BTC should recover above the $30,000 level and possibly rush to $32,000.
Otherwise, the next important support will be at $28,100 (Fibo level of 0.5 retracement). After the correction is completed, we can expect a significant increase in price.
Despite the bullish outlook, a decisive close of BTC below the 0.618 Fibo support level of the correction at $27,300 will indicate that instead of the bottom, the price has reached a local top. In this case, bitcoin could fall to $25,000.
