Bitcoin (BTC) Falls to $40,000 as Technical Indicators Show Bearish Signs
Bitcoin (BTC) fell sharply on February 17 and briefly traded below $40,000. However, it has since bounced back and is trying to stay above its bullish structure.
Bitcoin fell sharply on Feb. 17, creating a bearish engulfing candle in the process. The move lower occurred after a rejection of the $44,300-$45,000 horizontal resistance range.
In addition to the significant drop, the technical indicators show bearish signs. This is visible on the RSI (red icon), which has dropped below 50. The RSI is a momentum indicator and moves below 50 are considered bearish.
short term support
The six hour chart shows that BTC is trying to hold above an ascending support line that has been in place since Jan 24. A break below would call into question the entire bullish structure.
On another bearish note, BTC has failed to hold above the $41,950 minor horizontal support area, which is now likely to act as resistance.
A look at the two-hour chart shows no bullish divergence, which would be a sign that a move higher could still be on the horizon. However, it is worth noting that the RSI has dipped into oversold territory (green circle). The last time this happened, BTC created a major local fund.
BTC Wave Count Analysis
Due to yesterday’s drop, the possibility of the rise that began on January 24 being a five-wave move up is now at serious risk.
The reason for this is that the price is close to breaking the 1-2 trend line, which would invalidate this pattern.
Also, if the current decline is the fourth wave (red), subwaves A and C have had an exact 1:1 ratio (black).
Therefore, a continued decline would suggest that the decline is corrective.
If this occurs, the long-term count would lean towards the entire move being part of a large fourth wave symmetrical triangle.
In this scenario, BTC could drop to $37,000 before rising to $50,000.
While the trailing diagonal possibility is still valid, the sub-wave count is extremely irregular, casting serious doubt on its validity.
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