Bitcoin (BTC) is showing clear signs that it has completed a correction and is approaching the next resistance area.
Growth engulfing model
BTC rebounded significantly in the week of December 19-26, hitting a closing price of $ 50,775. This resulted in a bullish engulfing candlestick pattern on the weekly timeframe. This is a candlestick pattern where all of the previous decline is contained in the current bullish candle.
Twice before that happened (marked in the graph below), BTC rebounded 49% and 40%, respectively.
Despite this development, the technical indicators still offer mixed prospects.
The MACD, which is made up of short and long-term moving averages (MAs), is falling. This means that the short-term MA is slowing down compared to the long-term MA. However, it is still in positive territory, which shows that the short-term MA is still moving faster.
The RSI, which is a momentum indicator, is right on the 50 line. This is a sign of a neutral trend as values above 50 are considered bullish while values below 50 are considered bearish.
However, the indicator produced a hidden bullish divergence, a strong sign that the trend is continuing.
BTC / USDT weekly chart | Source: TradingView
The daily chart shows BTC breaking above the descending resistance level that has existed since the all-time high on November 8th. This indicates that the correction is over.
Technical indicators also favor the upward trend.
The MACD histogram produced 13 consecutive bars of higher momentum and almost went positive. In addition, the RSI is about to break the 50 threshold (green symbol). Both are considered signs of an upward trend.
As a result, the daily timeframe offers a more prominent bullish outlook than the weekly chart.
The closest resistance is between $ 55,470 and $ 58,640 created by the 0.5-0.618 Fib resistance areas.
BTC / USDT daily chart | Source: TradingView
The six-hour chart shows that BTC has been trading within an ascending parallel channel since the December 4th low and is currently trading on the center line of the channel.
The channel’s resistance level is near the 0.5 fib level at $ 55,500.
BTC / USDT 6-hour chart | Source: TradingView
The wave number shows that BTC is in wave Y of the WXY correction (pink). If waves W and Y have a 1: 1 ratio, BTC can hit a high of $ 55,450, near the resistance area described above. This entire move is likely to complete the longer-term B-wave (black).
If BTC moves above this zone it will go a long way in confirming that the long term trend is bullish and that the current rally is not part of a longer term correction.
BTC / USDT 2-hour chart | Source: TradingView
You can see the BTC price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.