Bitcoin Rally Stalls After Eight Weeks of Growth
Date: 2023-12-19 Author: Dima Zakharov Categories: BLOCKCHAIN, CRYPTO PAYMENTS
Bitcoin Fails to Close Above Resistance
The weekly timeframe reveals that Bitcoin's price had been rapidly rising since October, reaching a new yearly high of $44,730. It had positioned itself above a horizontal resistance level and a key Fibonacci level during this climb. At that point, Bitcoin had formed eight consecutive weekly bullish candles.
However, last week, the price took a tumble, marking the first bearish weekly candle since the start of the upward trend. This drop pushed Bitcoin below a crucial resistance level, indicating that the bullish breakthrough was merely a deviation.
RSI Indicates Overbought Conditions
The Relative Strength Index (RSI) is still above the neutral 50-mark but has entered overbought territory. Although it has slightly decreased, it has not fallen below 70, which would be a bearish sign.
What Analysts Are Saying
Crypto traders and analysts on the X platform are bearish regarding Bitcoin's short-term trend. IncomeSharks has pointed out a gap around $40,000 on CME that they believe will be filled.
Rager believes that the price will return to test its moving average, as the current rally has gone too far. He stated that any price breakthrough below $40,000 should not cause concern, as it would be a healthy correction for further growth in the first quarter of 2024.
Finally, CredibleCrypto is bearish in the short term due to wave analysis. However, they believe that another high is likely before a major correction.
BTC Forecast: Has the Correction Begun?
According to Elliott Wave analysis, the most probable scenario suggests that BTC has begun the fourth wave within a five-wave upward movement (white color). Notably, the third wave is extended, with its sub-waves highlighted in black on the chart.
With the daily RSI showing significant bearish divergence, it is likely that the third wave has already concluded. Bearish divergence occurs when price growth is accompanied by a decrease in momentum, often leading to downward movements.
The initial target for the fourth wave is at the 0.382 Fibonacci correction level at $37,650, which is 8% below the current price.
Meanwhile, further growth in BTC beyond the yearly high would indicate that the correction has ended, potentially propelling it up by 23% to the next long-term resistance level at $50,500.
