Over the course of the last seven days, the price of Bitcoin has increased by around 27.46% coming from $4186.5 at its lowest point last Tuesday measured to the highest point the price has been today which is at around $5336.3. Over the weekend we have seen the price continuing its increase after a minor correction. The increase was made to the level of the prior high which is proving to be a significant resistance point and is around the median point of the two outlined ascending trendlines which are considered to be the unconfirmed ascending channel’s resistance.
The price action formed what appears to be an ascending triangle from last week’s increase as the buyers are pushing the price higher while sellers are defending one particular level. If the buyers catch more momentum a breakout to the upside might occur but if the sellers have larger positions the price is going to get rejected propelling it into downside movement as the interaction with the resistance level would end as a rejection.
In today’s post, we are going to examine the likelihood of both scenarios as the price of Bitcoin is being traded at key resistance levels.
Looking closely at the wave structure from last Friday the increase looks more corrective then impulsive. As prior to the minor ascending channel in which the price action developed to the upside an ABC correction took place the increase from Friday could be the second correction which is one to the upside which means that another third to the downside is coming next. The last structure could have been the expected third correction to the downside as I have counted three waves but it could very well be still the part of the upward movement.
As you can see the price increased yesterday to the vicinity of the prior high where it found resistance. The prior high resistance has caused the price to fall back and is currently forming a cluster around the minor horizontal support level with clear signs of struggle indicated by the wicks from both sides. The lower ascending line is serving as support but as the upward movement inside the ascending channel ended the move to the downside started yesterday when the interaction with the prior high resistance was made. The current downside movement could be the third consecutive correction which would bring the price below the support level of the ascending channel which we are soon to see as the cluster is being formed prior to a decisive move.
Zooming out on to the 4-hour chart you can see the mentioned unconfirmed ascending channel clearly. As the price has entered its resistance zone as has experienced an exponential increase last week after a retracement on Friday only to continue moving higher I think that the increase ended for now. The minor ascending channel that we have seen from Friday was most likely the 5th wave of the 3rd Minute impulse which ended as a truncation. This could mean that now a deep retracement is coming potentially to around $4685.5 where the 1.272 Fibonacci level is after which another wave to the upside would develop as the 5th wave should develop.
The target price for the 5th wave would be around the intersection of the horizontal resistance level at $5562 and the upper ascending trendline from the still unconfirmed ascending channel of a higher degree.
- 1 Resistance at $5336
- 2 Resistance at $5562
- Pivot point at $5158
- 1 Support at $5081
- 2 Support at $4685.5