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Bitcoin (BTC) failed to hold on to the area of marginal support and could make a bearish breakout from the 22-day consolidation pattern.
Bitcoin has been growing inside an ascending parallel channel since May 12. As a result, on May 31, the BTC rate formed a maximum of $ 32,399. At first, it seemed that this led to a bullish breakthrough of the horizontal resistance area of $ 31,800, but the price immediately began to decline. Accordingly, the bullish breakout turned out to be just a price deviation (red circle).
In addition, BTC sank below the $30,800 area, which was expected to be support for Bitcoin. Now it has turned into resistance (red icon).
Thus, the 6-hour chart reflects a bearish picture. First, here the price is traded inside an ascending parallel channel, which is traditionally considered a corrective pattern. Second, the $30,800 area failed to support the pair and instead became resistance.
Source: TradingView
Resistance line
On the daily chart, you can see that bitcoin has been declining along the downward resistance line (dotted line) since March.
The RSI index, like the price, has also been moving along the downward resistance line all this time. At the same time, the RSI has already been able to make its bullish breakthrough, and the BTC rate has not yet.
In addition, the RSI gives bullish divergence signals (green line). However, on the chart, we see a rebound from the level of 50 (red icon) and a subsequent decline.
Such conflicting signals on the Daily timeframe do not give us the opportunity to confidently determine the further direction of the trend.
Source: TradingView
Wave BTC analysis
Despite still bullish results longer term wave analysis, the short-term picture looks less optimistic and supports our analysis of price dynamics within the channel.
The results of the most likely analysis suggest that BTC has completed the formation of the correctional structure A-B-C with the ratio of waves A and C as 1: 0.618. This is also evidenced by the decline, during which the market tested the strength of the support line of the ascending parallel channel.
Thus, a bearish breakout from the channel will confirm the likelihood of a further price decline.
Source: TradingView
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