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Bitcoin (BTC) Breaks Out From Descending Channel, Targeting Previous Support

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Bitcoin (BTC) Breaks Out From Descending Channel, Targeting Previous Support

Bitcoin (BTC) has increased considerably since its Jan 10 lows and is showing several signs that indicate the corrective phase is complete.

BTC had been trading inside a descending parallel channel since Dec 27. The movement inside it led to a low of $39,650 on Jan 10. However, BTC bounced immediately after and reclaimed the Dec 4 lows at the midline of the channel. This created a long lower wick, which is normally considered a sign of buying pressure. 

On Jan 13, BTC broke out from the resistance line of the channel, confirming that the short-term correction had come to an end. 

The closest resistance area is found at $45,850 that previously acted as support. This is the 0.5 Fib retracement resistance level and a horizontal resistance area.

Bitcoin (BTC) Breaks Out From Descending Channel, Targeting Previous Support

BTC Chart By TradingView

Indicator readings

Technical indicators in the daily time frame are showing bullish signs. This is especially visible in the MACD, whose histogram has generated a very significant bullish divergence (green line). This is a sign that often precedes upward moves.

In addition to this, the successive higher momentum bars (green icon) alongside the bullish price close give a bullish reversal signal.

Bitcoin (BTC) Breaks Out From Descending Channel, Targeting Previous Support

BTC Chart By TradingView

BTC wave count analysis

The long-term wave count still has several valid possibilities left.

However, the short-term count suggests that the ongoing descent measuring from the all-time high is complete (black). The sub-wave count is shown in red.

Bitcoin (BTC) Breaks Out From Descending Channel, Targeting Previous Support

BTC Chart By TradingView

Due to the breakout from the channel and deep retracement of the potential sub-wave four (red), it does not seem likely that the current increase is part of sub-wave four.

So, the most likely scenario suggests that the correction is complete and BTC reached a bottom on Jan 10 after the $39,558 low.

Bitcoin (BTC) Breaks Out From Descending Channel, Targeting Previous Support

BTC Chart By TradingView

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.

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