Key Takeaways
The Bitcoin (BTC) price fell last to start last week but recovered by the end of the week, creating a long lower wick.
The recovery took Bitcoin to a short-term resistance level, which can determine the future trend.
Can BTC break out above this area, or will it get rejected, continuing last week’s correction? Let’s find out.
The BTC price has corrected inside a descending parallel channel since its all-time high price of $73,777 in March.
Both the channel’s resistance and support trend lines have been validated numerous times, and while the price moved outside of its confines, it created wicks and returned to it.
More recently, in September, the channel’s support (white icon) and resistance (black icon) were validated.
Last week’s decline was significant, but BTC stayed in the channel’s upper portion, validating it as support (black circle).
Furthermore, the weekly Relative Strength Index (RSI) increased above 50 while the Moving Average Convergence/Divergence (MACD) is growing in momentum and could make a bullish cross.
So, in the weekly time frame, the price action and indicator readings imply a breakout is likely.
While the weekly time frame readings are bullish, the daily chart is not as decisive.
This is because the price still trades under the $64,500 horizontal resistance area. On Sept. 27, it seemed that BTC broke out above this area(black circle) but fell back below it shortly afterward.
The previous breakout was just a bearish deviation. Now, while the BTC price is moving toward it, the trend cannot be considered bullish until the price reclaims it.
The short-term wave count is unclear, adding to the uncertainty. The upward movement (highlighted) starting from Sept. 5 is almost definitely impulsive. However, it is unclear if the resulting decline is only part of the correction or the completed correction.
Today’s Bitcoin price trades at the 0.618 Fibonacci retracement resistant near $63,980.
If the increase is a B wave (black), the price will likely get rejected at the current level and decline again, possibly bottoming at $57,880.
On the other hand, if the correction is completed (yellow), the BTC price will immediately break out and reach new highs.
Therefore, the reaction to the $63,980 resistance will be critical in determining if the short-term trend is bullish or bearish.
Bitcoin’s long-term trend is bullish, and a breakout from its long-term pattern is likely. However, the short-term price action and wave count are both undetermined. Whether BTC breaks out above $63,980 or gets rejected will likely determine the short-term trend.