The Bitcoin price decreased by nearly 13% on Sept 3, reaching a long-term support level which is essential for the possibility of upward continuation.
The price reached a major support area at $10,000. With the exception of the deviation on June 1, this area has previously acted as resistance since March and is now expected to act as support.
Bitcoin Hits Oversold Levels
While technical indicators show no signs of reversal, the MACD, RSI, and Stochastic RSI are all at their lowest levels since the March crash. This is a sign that the market is heavily oversold.
The weekly chart provides a similar outlook since the $10,000 level has been tested numerous times as resistance. In addition, the current decrease looks more like a re-test of this level and the descending resistance line drawn since the all-time high price reached in December 2017.
The weekly close is going to be very important. The creation of a long lower-wick and possibly a hammer candlestick would suggest that the move is just a re-test rather than the beginning of a correction. On the other hand, a close below this area and the descending resistance line would likely have major bearish implications.
The most likely wave count up to this point has Bitcoin just completing the fourth sub-wave (in black below) of the fifth wave (in white).
The sub-wave has taken the form of a W-X-Y correction, which is expected to end in the next few days. The reason for this is the length of the preceding third sub-wave and the ensuing correction.
Sept 5 would be a suitable level for the correction to end, as it would have taken twice as long as the preceding upward move.
Since BTC has broken down below the 0.5 and 0.618 Fib levels, the next zone which could initiate a reversal is found near $9,700 at the 0.786 Fib level of sub-wave 3.
Looking closely at the W-X-Y correction, we can see that the price is likely in the C and final wave (in blue below).
Using the 1.61 Fib length of wave A gives us a target of $9,890 (blue Fib) and using the 2.61 length of wave W gives us the same target.
Since this fits with the 0.786 Fib from the previous chart, it’s likely to act as the low.
Zooming in on the C wave, we can see that the price is nearing the end of the correction. However, it is likely that there is one more wave down since the current increase looks corrective rather than impulsive.
If this scenario plays out to finish the correction, we would expect a new wave five to initiate an impulsive bounce.
To conclude, the Bitcoin price is expected to fall towards $9,800 before initiating a new upward move that takes it above the current yearly high.
For BeInCrypto’s previous Bitcoin analysis, click here!
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Source: Be In Crypto