Bitcoin (BTC) Consolidates at $42,000, Likely About to End Wave Four

[ad_1]

Bitcoin (BTC) bounced off a minor support level and appears to be gearing up for a short-term break above a descending resistance line.

Bitcoin broke out of a descending resistance line on January 12 and validated it as support two days later (green icon). After a weak rebound, it created a slightly lower low on January 14.

It then bounced once more, creating another long bottom strand. This is often seen as a sign of buying pressure.

The nearest resistance zone is found at $45,850. This is the 0.5 Fib Retracement resistance level and a horizontal resistance zone.

Short term BTC movement

The two-hour chart is showing some bullish signs, but not enough to confirm a bullish reversal.

First, BTC bounced right off the 0.618 Fib retracement support level of $41,538. This is a common level for correctional services to complete their cycle.

Second, the MACD is creating successive higher momentum bars, even though the second bar has not yet closed. The MACD is created by short-term and long-term moving averages (MAs), and higher momentum bars suggest that the short-term MA is gaining momentum relative to the long-term average. This usually happens at the start of uptrends.

A break of the short-term descending resistance line (dotted) would be needed to confirm a short-term reversal.

Wave count analysis

The long-term wave count suggests that BTC is currently in the fourth wave of a five-wave upward move that began in December 2018.

The second wave took 259 days to develop (highlighted) while the fourth wave has so far taken 329 days. However, the short-term tally of the fourth wave is still unclear.

The more bearish count suggests that BTC is in an extended flat correction. This means that wave C is 1.61 times longer than wave A. If true, this would mean that the correction will continue and BTC may fall back to $21,000.

The second possibility suggests that BTC has completed, or is about to complete, a steady flat correction. This is a type of correction in which waves A and C have a ratio of 1:1.

Considering that the long-term wave four described earlier is already longer than wave two, this would make sense as a completed pattern.

The least likely possibility would be that BTC is trading in what is known as a fourth wave triangle. If correct, the pattern would take several more months to bounce between support and resistance.

As this would create a very significant time difference compared to the second wave, this seems unlikely.

For previous Bitcoin (BTC) analysis from BeInCrypto, click here.

Disclaimer All information on our website is published in good faith and for general information purposes only. Any action the reader takes on the information found on our website is strictly at their own risk.

[ad_2]