The Bitcoin (BTC) price has broken out from a crucial resistance area and invalidated a number of bearish wave counts.
This makes it likely that BTC has begun a new upward wave that takes it above the current yearly highs.
Bitcoin’s Monthly Close
During the month of August, Bitcoin created a small bullish Doji that came after a bullish engulfing candlestick in September.
While this is a bullish development, the price has yet to clear the wick highs of July 2019. Furthermore, there is a considerable bearish divergence in the RSI.
However, both the MACD and Stochastic RSI are increasing, and none of the RSIs are overbought. Therefore, we have mixed signals in the monthly time-frame.
Bullish Daily Time-Frame
The daily chart shows that BTC has just increased above the resistance from the bearish engulfing candlestick of Aug 25. This is a sign that the price is heading upwards, possibly towards the next resistance area, which is found at $12,300.
Conversely, the closest support area is found at $11,300.
Technical indicators are bullish. The MACD has given a bullish reversal signal, and the Stochastic RSI is ready to make a bullish cross, moving upwards from its oversold territory.
The RSI has bounced at 50 and is also moving upwards.
As outlined in BeInCrypto’s Aug 30 wave count analysis, the invalidation of the bearish count falls at $11,825 (red line in the chart below). The Bitcoin price already invalidated it today, so it’s now likely that wave 4 (in black) has ended and is now in wave 5.
Wave 4 had an unusual correction (blue) known as a running flat, in which the B wave breaches the top of the A wave, but C does not breach the lows of the A wave.
Using the length of waves 1-3, we can make the assumption that wave 5 will end near $13,100 or $14,169, the 0.618, and 1 Fib levels of waves 1-3.
If wave 5 extends, which is possible, the price could go even higher.
The shorter-term count suggests that the price has already begun the five-wave formation (blue) which finalizes wave 5, inside of which the third wave has extended (orange).
The reason for the extension is the overlap between the two waves (red line). A decrease below the wave 4 low of $11,117 would invalidate this particular wave count.
To conclude, the Bitcoin price has likely begun a new upward move which is expected to take the price towards the $13,000-$14,000 range.
For BeInCrypto’s previous Bitcoin analysis, click here!
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Source: Be In Crypto