Bitcoin Bearish Break Testing $45K Support Zone And 38.2% Fib

Bitcoin made a bearish breakout rather than a bullish break as we expected in our analysis

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Image Source: Upsplash

This shows how strong and important the 21 ema zone really is: price action was unable to break above the bearishly angled 21 EMAS. Let’s review the new situation.

Price Charts and Technical Analysis

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Our original analysis on Bitcoin (BTC/USD) favoured a bullish break above the 21 ema zone but a bearish swing is already testing the previous bottom near $47k. 

  • Price action made an immediate bearish swing instead as it used the 21 EMAs as a resistance zone.
  • This means that the price action seems to be completing a bearish ABC (pink) pattern as we expected, just a little bit sooner. Also the wave B is weaker than expected.
  • If our outlook is correct, then the ABC (pink) should complete a wave 4 (purple) pullback.
  • The wave 4 (purple) could already be completed (green arrows) or make one more lower low to tag and hit the 38.2% Fibonacci retracement level. A bounce confirms it (blue arrows)
  • The uptrend remains valid as long as price action stays above the 50% Fibonacci level. A break below places the uptrend on hold (orange button) and a deep retrace invalidates it (red button).

On the 4 hour chart, price action seems to be building a bearish ABC (pink) zigzag pattern with 5 waves (grey) in wave A (pink):

  • The current bullish bounce could be a wave 4 (grey) in wave C (pink) as long as price action remains below the 21 ema zone.
  • A bullish breakout (green arrows) could invalidate the bearish wave 4-5 outlook and indicate an immediate uptrend.
  • A bearish breakout (orange arrows) could create one more lower low to finish wave 4 (purple).
  • A bullish bounce after the lower low (blue arrow) could indicate the end of the retracement.

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