Bitcoin (BTC) Holds Key Support, Keeping Bullish Momentum Intact

Key Takeaways

• The Bitcoin (BTC) price has created two higher lows.
• BTC broke out from a short-term descending wedge.
• Can Bitcoin sustain its breakout and reach new highs?

Bitcoin’s price recovered swiftly after the liquidation event on Feb. 3, creating a relatively neutral weekly candlestick. This week, the price created a higher low, breaking out from a short-term wedge.

With this short-term reversal, bulls are optimistic that Bitcoin’s correction is over and new highs will follow in February.

But, the key question remains: Can Bitcoin sustain its increase and move to new highs, or will it reverse, breaking down from its local lows and confirming the start of the bear market?.

Bitcoin Creates Higher Low

The BTC price bounced on Feb 9, creating a bullish candlestick and validating the $95,500 horizontal area as support. Starting on Jan. 13, the bounce was the third higher low (white icon) since Jan. 13, creating an ascending support trend line.

Today’s Bitcoin price is breaking out from a descending resistance trend line (dashed) that has existed since the start of the month.

If the breakout holds, BTC could reach the critical resistance at $99,300, created by a horizontal resistance area and the 0.5 Fibonacci retracement resistance level. An increase above it could accelerate the rally toward a new all-time high.

Technical indicators echo this sentiment. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are increasing but have not crossed their bullish thresholds at 50 and 0, respectively.

A breakout from $99,300 will likely cause the indicators to cross these levels.

The two-hour chart gives a bullish Bitcoin prediction. It shows that BTC has bounced at the 0.618-0.786 Fibonacci retracement support area at $93,900 – $95,750 before breaking out from a descending wedge. This signifies that the correction is over, and new highs are likely.

Therefore, the BTC price could reclaim the $99,300 area and possibly move to new highs. Let’s look at the wave count to determine where it could head next.

Possible BTC Price Bottom

The wave count gives a bullish outlook for Bitcoin, reiterating the importance of the ongoing bounce. The most likely count shows a completed five-wave increase and A-B-C corrections since January 13. Waves A:C had a 1:1.61 ratio, common in such structures.

For Bitcoin to remain bullish, it has to hold above the $91,257 low (red, dashed) and especially the $89,257 low (red).

A breakdown below the former will cast doubt on this count, while one above the latter will invalidate it.

The long-term count suggests that BTC has either completed its five-wave increase (red) or is in its final portion. The sub-wave count is in white. If the short-term breakout continues, sub-wave five will extend.

However, in the event of a reversal, the BTC price will have completed its market cycle.

The current high is suitable for a cycle top since it has occurred at the 1.61 external retracement of the previous drop (white) and gives wave five the same length as waves one and three combined (red)

An extension can take the Bitcoin price toward $142,020-$155,326, giving wave five 1.61 times the length of waves one and three combined and reaching the 2.61 external Fibonacci retracement level.

Therefore, the Bitcoin movement from now on is critical. The continuation of the breakout above $99,000 will confirm the bottom is in and wave five has started. If this happens, Bitcoin will increase to a new all-time high.

Alternatively, a decline below $91,300, especially $89,400, will confirm that the bear market has started.

Critical Week Ahead

The BTC price recovered after the February 3 liquidation event and recently broke out from a short-term wedge pattern.

Whether the price maintains its upward movement will be critical for the direction of future trends.