Bitcoin (BTC) price has It has been trading in a corrective pattern since June 23, most likely in response to the previous upward move.
While BTC price briefly reached a new yearly high on July 5, the price action since then supports the possibility of further declines. This is also in line with the wave count and RSI readings.
Bitcoin (BTC) price declines after a bearish candlestick
Technical analysis on the daily time frame shows that the price of Bitcoin fell right after it reached a new yearly high of $31,500 on July 6. On the same day, he created a shooting star candle. This is a type of bearish candlestick that occurs at local highs. It is marked by a long upper wick and a bearish close. It shows that despite the previous increase, the sellers took over and caused the price to drop significantly below its high and opening price.
Moreover, the candle caused BTC price to close below the $31,500 horizontal resistance area. This is another bearish sign that further legitimizes the shooting star.
However, the daily RSI gives a mixed reading. The RSI is a momentum indicator that traders use to assess market conditions and decide whether to buy or sell an asset, which also indicates an uptrend.
A reading above 50, along with an upward trend, indicates that buyers still have an advantage, while a reading below 50 indicates the opposite. While the RSI is declining, it is still above 50. Hence, the indicator is giving mixed readings.
BTC Price Prediction: The number of waves indicates that the initial fall will precede the price rise
A more detailed analysis of the short-term six-hour time frame reveals a bullish long-term outlook but a bearish short-term outlook. This is mostly due to the number of waves.
Elliott Wave Theory involves analyzing long-term recurring price patterns and investor psychology to determine trend direction.
The wave count indicates that bitcoin price has completed a five-wave upward movement that started on June 15. If so, the move since the initial high on June 13 has been corrective (highlighted). The fact that the price action is inside a parallel channel supports this possibility.
Therefore, if the number is correct, BTC price will collapse from the channel and drop to the 0.382 Fibonacci retracement support level at $28,900 or even 0.5 at $28,150.
After that, the previous long-term upward movement can continue.
Finally, the 6-hour RSI supports the possibility of a breakdown. The indicator is decreasing and it is below 50, both of which are indications of a downtrend.
Although bitcoin price is expected to be bearish in the short term, a move above the top of the fifth wave at $31,500 would mean that the correction has completed and the trend is to the upside. In this case, bitcoin price is likely to break out of the channel and rise to the next resistance at $36,000.
For the latest cryptocurrency market analysis from BeInCrypto, click here.
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.