Bitcoin (BTC) wipes out recent gains, but reason to stay bullish

Bitcoin (BTC) fell sharply on September 13, casting doubt on the legitimacy of the previous upward move.

BTC reached a high of $ 22,799, briefly moving above the 0.618 Fib retracement resistance level of the entire previous bearish move (red icon). The high also seemed to cause a recovery of the support line of the previous parallel ascending channel.

However, the price failed to sustain its upward movement and dropped sharply on the same day, creating a huge bearish candlestick which 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 closest support area would be at $ 19,000.

Wave count analysis

The rise since Sept. 7 clearly looks like a five wave upward movement. Thus, it would make sense that the resulting decrease is part of an ABC corrective framework. However, the fact that the decline was extremely sharp, immediately reaching the 0.618 (black) Fib retracement support level cast doubt on this possibility.

Since there are also several potential long-term wave counts still in place, it’s safe to say that the wave count is still unclear.

However, the most likely move would suggest a rise towards the 0.5-0.618 (white) Fib retracement resistance levels before another decline. The aforementioned resistance is between $ 21,300 and $ 21,660.

BTC dominance rate

An interesting development during yesterday’s drop is that the Bitcoin Dominance Rate (BTCD) dropped dramatically during the decline in BTC’s price. However, despite this decrease, BTCD appears to have broken out of a descending resistance line and the daily RSI has moved above 50 (green icon).

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Both of these are considered to be signs of bullish trends. Hence, 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 inside the long-term support at 40.50% and has created a bullish candle in the weekly time frame. Additionally, the weekly RSI generated a significant bullish divergence, aligning with the daily timeframe readings.

To be[in]Crypto’s previous Bitcoin (BTC) analysis, click here


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