Bitcoin (BTC) erases recent gains, but reason to remain bullish
Bitcoin (BTC) fell sharply on September 13, casting doubt on the legitimacy of the preceding upward movement.
BTC hit a high of $22,799, briefly moving above the 0.618 Fib retracement resistance level of the entire previous downward move (red icon). The high also appeared to cause a recovery of the support line of the previous rising parallel channel.
However, the price failed to sustain its upward movement and fell sharply on the same day, creating a massive bearish engulfing candlestick that led to a low of $19,860. The rejection validated both the 0.618 Fib retracement resistance level and the previous support line as resistance.
If the downward movement continues, the nearest support area will be $19,000.
Wavenumber analysis
The increase since September 7 clearly looks like a five-wave upward movement. So it would make sense that the subsequent reduction is part of an ABC corrective structure. The fact that the decline was extremely sharp, immediately reaching the 0.618 Fib retracement support level (black), cast some doubt on this possibility.
Since there are also several potential long-term wave numbers still in place, it’s safe to say that the wave count is still unclear.
Nevertheless, the most likely move would suggest that a rise towards the 0.5-0.618 Fib retracement resistance levels (white) is expected before another drop. The aforementioned resistance is at $21,300 to $21,660.
BTC dominance rate
An interesting development during yesterday’s decline is that the Bitcoin Dominance Rate (BTCD) fell sharply during the BTC price decline. However, despite this decline, BTCD appears to have broken out from a descending resistance line and the daily RSI has moved above 50 (green icon).
Both of these are considered signs of bullish trends. So they support an upward move towards the 0.5 Fib retracement resistance level at 43.70%.
The weekly chart supports this possibility as it shows that BTCD is trading within long-term support at 40.50% and has created a bullish candlestick in the weekly time frame. Moreover, the weekly RSI has generated a significant bullish divergence, in line with the readings from the daily time frame.
For Be[in]Crypto’s previous Bitcoin (BTC) analysis, click here
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