IS THE WORST OVER?
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The price of Bitcoin (BTC) has bounced sharply since hitting its local low on June 15. It is close to breaking out of a nearly three- month pattern.
Despite this bullish move, the wave count suggests that further declines are expected. Therefore, another sharp drop could be in store once the relief rally is complete.
Bitcoin price bounces but is not out of the woods yet Technical analysis of the daily time frame shows that the BTC price has fallen within a parallel descending channel since early April. Such channels are considered corrective patterns. As a result, a channel breakout is the most likely future price scenario.
On June 15, the BTC price bounced (green icon) at a confluence of support levels at $25,000. The area is created by the Fib retracement support level of 0.382 and a horizontal support area. Because of this confluence, it is a crucial support area. Since the bounce, BTC price has moved up to the channel resistance line.
The RSI is a momentum indicator used by traders to assess whether a market is overbought or oversold and to determine whether to accumulate or sell an asset.
Readings above 50 and an uptrend suggest that the bulls still have an edge, while readings below 50 indicate the opposite. While the RSI is below 50, it is rising, a sign of a neutral trend.
In addition, the indicator has moved above and below 50 freely since April 20 (highlighted). This is also considered a sign of an indeterminate trend.
Bitcoin price forecast:
Is the wave count bullish or bearish?
A closer look at the movement shows that Elliott wave theory and Fibonacci levels suggest that further declines are likely. W' there are still two possible counts in play, both suggest that price has yet to make a low.
Technical analysts employ Elliott wave theory as a means of identifying long-term recurring price patterns and investor psychology, which helps them determine the direction of a trend.
The main count shows that the BTC price has corrected in a corrective W-X-Y (black) structure since late May. If correct, BTC price is now in wave Y, which is the last wave before a bullish reversal.
There are three confluence levels near $23,300, making this a likely level for the correction to end.
First, the $23,300 area aligns with the 0.5 Fib (white) retracement support level. The principle behind Fibonacci retracement levels suggests that after a considerable price move in one direction, the price will retrace or partially return to a previous price level before continuing in its original direction.
Next, a low near $23,300 would give the W:Y waves a ratio of exactly 1:1. Finally, the area coincides with the channel support line.
Because of this confluence, the area is expected to act as a bottom.
The alternative count suggests that BTC price has completed a major diagonal from its April highs. While the pattern is complete, the diagonal is part of a larger structure, either a corrective wave A or a bearish wave 1.
As a result, this count would produce more short-term gains. However, once the rebound is complete, another sharp drop is expected, taking the price down to at least the $23,300 support area and possibly to $21,000.
Despite this bearish short-term $BTC price prediction, a move above the yearly high of $31,000 (red line) will mean that the trend is bullish. In that case, an upward move to $40,000 will be the most likely future price scenario.
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