The price of Bitcoin has recovered from Friday’s decrease over the weekend and came up close to the levels of the starting point of the mentioned decrease before showing signs of the top as the head and shoulder pattern developed.
This is now very likely to end with more downside movement as the three-wave structure developed which is likely to end as a correction to the upside.
- Bitcoin increased by over 15% but came back to the significant resistance area at the prior high and is showing signs of weakness.
- The increase seen over the weekend is likely correctional which is why another downside move would be expected shortly.
- Another possibility would be that the price started the final 5th wave as it hadn’t ended but this is not as likely.
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Bitcoin Analysis BTC/USD
On Friday, the price of Bitcoin has been in a downward trajectory with strong momentum as the cryptocurrency decreased from $7917 to $7105.7 at its lowest point.
From there the price has started increasing again and has continued doing so over the weekend until today’s open when the price reached $8215 which is an increase of 15.62% but since today’s open the price has started decreasing again and is currently being traded at $7881.
Looking at the hourly chart, we can see that the price of Bitcoin recovered the downfall which started last Thursday with the price getting close to the starting point of the mentioned decrease but has come slightly lower than its highest point before showing signs of weakness.
The downfall which started on Thursday was made in a five-wave manner and with the increase, after developing in three waves we could be seeing the development of the higher degree 5-3-5 correction after the 5th impulse wave ended.
The price action has formed a head and shoulders pattern with the horizontal level at $7890 serving as support which was also indicated by the large wick from the downside seen on the last couple of hourly candles. This could be the first sign that the price of Bitcoin isn’t heading higher on the currently seen upward momentum which started on Friday.
If we are seeing the development of the ABC correction after the 5th impulse wave ended the price is now likely to develop the C wave which would also be in a five-wave manner similar to the downside movement seen from Thursday to Friday.
If this occurs the price would likely find support on the still unconfirmed ascending trendline but if it goes below it and is developing an ABC correction it could end around $6980 area.
The other possibility would be that the decrease seen on Friday was the 4th wave retracement from the previous wave which would mean that the increase seen after is the ending 5th wave and is likely to continue moving further up, but in either way, I would be expecting a retracement first.