29 May 2023 15:17, UTC
Reading time: ~2 m
The Bitcoin (BTC) price saved a breakdown with a significant bounce on May 25. The price is now in the process of breaking out from a corrective pattern.
Despite the breakout attempt, it is more likely that the price will decrease again to complete the correction before continuing its upward trend.
Bitcoin Saves Breakdown With Bounce
The technical analysis from the daily time frame shows that the BTC price has traded in a descending parallel channel since April 14.
The descending parallel channel is considered a bullish pattern. As a result, a breakout from it is the most likely scenario.
On May 12 and 25, the BTC price seemed to break down from the $26,800 support area and the middle of the channel. However, it bounced both times (green icons).
Then, it decisively reclaimed the area. Currently, the BTC price is attempting to break out from the channel’s resistance line.
BTC/USDT Daily Chart. Source: TradingView
The RSI gives a mixed reading. By using the RSI as a momentum indicator, traders can determine whether a market is overbought or oversold and decide whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is upward, bulls have an advantage. The opposite is true if the reading is below 50. The indicator is currently moving above 50 after previously decreasing below the line.
However, the bullish reversal is not confirmed yet.
BTC Price Prediction: When Will the Decrease Stop?
A closer look at the movement shows that Elliott Wave theory and Fib levels suggest that the price will eventually break out from the channel. However, another drop could transpire before the eventual breakout.
The main count indicates that the price completed a five-wave upward movement beginning in November 2022 (white). Then, the drop since April 16, 2023, is part of a corrective W-X-Y structure.
By studying recurring long-term price patterns and investor psychology, technical analysts utilize the Elliott Wave theory to ascertain the trend’s direction.
If the count is correct, the price will soon complete the X wave. Then, it will begin its final drop in order to complete the Y wave.
BTC/USD Daily Chart. Source: TradingView
The most likely level for the correction to end will be between the 0.382-0.5 Fib retracement support levels (white) at $23,300-$35,100.
The principle behind Fibonacci retracement levels suggests that after a considerable price movement in one direction, the price will retrace or go back partially to a previous price level before continuing in its original direction.
Despite this bearish short-term BTC price prediction, a close above $29,000 will mean the short-term correction is complete. In that case, the price can immediately increase to $35,000.
Read the full article here