Bitcoin (BTC) bounced off support on May 25 and avoided a bearish breakout. Now the price is trying to make a bullish breakout from the corrective pattern
Despite the attempted bullish breakout, it is more likely that BTC will decline again to complete the correction and only then continue the uptrend.
Bitcoin bounced back
As the technical analysis of the daily chart shows, since April 14, the BTC rate has been trading inside a descending parallel channel.
On May 12 and 25, BTC price attempted a bearish breakout of the $26,800 support area and the channel’s median line. However, both times it bounced (green icons).
Bitcoin then decisively reclaimed this area. Currently, the BTC price is trying to make a bullish breakout of the channel resistance line.
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The Relative Strength Index (RSI) is giving mixed signals as it now holds above the 50 mark but has previously fallen below it. This is a momentum indicator indicating overbought/oversold and bullish/bearish market sentiment, depending on whether it is above or below the 50 mark.
However, the bullish reversal has not yet been confirmed.
When will BTC stop falling?
Meanwhile, wave analysis suggests that price will eventually break out of the channel in an upward direction. However, there may be another fall before the final bullish breakout.
The main scenario assumes that the price has completed a five-wave upward structure, which began to form in November 2022 (white). In this case, the decline since April 16, 2023 is part of the WXY corrective structure.
If this analysis is correct, the price will soon complete wave X. Then it will start the final decline to complete wave Y.
The most probable foothold for the completion of the correction may be located between the Fibo correction levels of 0.382-0.5 (white), passing at $23,300-$35,100.
Fibonacci levels are traditionally considered the most likely levels for price to stop and reverse after a significant advance in any one direction. As expected, at these levels, the market can win back part of the distance traveled and only after that resume movement in the original direction. In addition, they can determine the limit levels of the price move.
Despite this bearish short-term BTC price outlook, a close above $29,000 would mark the completion of a short-term correction. In this case, the price can rise to $35,000.
Read also: Bitcoin Forecast: Is it worth waiting for further BTC growth?
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2023-05-29 17:55:00
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